Gold trading outlook: futures lower amid mixed US data, stocks gain

Gold futures were lower during early trade in Europe today. US stocks logged sizable gains yesterday, despite a worse-than-expected final reading on Q1 GDP growth. More economic reports from the worlds top economy are due later today. Iraq continues supporting havens, as the conflict is seen as escalating.

Gold futures for delivery in August traded for $1 316.6 per troy ounce at 7:23 GMT on the COMEX in New York today, down 0.45%. Daily high and low stood at $1 320.6 and $1 316.1 per troy ounce, respectively. The contract added 0.10% yesterday, and so far this week gold has gained more than 0.4%, reaching a two-month high of $1 326.6 per troy ounce on Monday.

Meanwhile, silver contracts for July stood at $20.935 per troy ounce, for a drop of 0.86%. Daily high and low were at $21.050 and $20.920 per troy ounce, respectively. The contract added 0.35% yesterday, and so far this week has gained 0.8%, reaching a three-month high of $21.170 per troy ounce on Monday., after dropping 0.16% on Monday.

“The market’s direction right now is a little unclear,” Victor Thianpiriya, analyst at Australia & New Zealand Banking Group Ltd., said for Bloomberg. “It’s not supportive on the physical side, so cues are going to be taken from the macro environment.”

US economy

Several economic readings for the US will be reported later today. Initial jobless claims for the week ended June 21 will be posted today, and analysts expect little change for a figure of 310 000. Meanwhile, continuing applications for unemployment benefits are projected to stand at 2.570 million, also only slightly more than previously.

Personal income and spending will also be reported today. Income for May has probably added 0.4%, after a further 0.3% gain for April. Meanwhile, personal spending is also set to have added 0.4% in May after -0.1% in April. Personal income and spending are leading indicators for consumer spending, which accounts for nearly 80% of US GDP.

Previously, the US posted some worse-than-expected data on Wednesday. Q1 GDP growth was far below the expected contraction of 1.8% at -2.9%, which is also the worst quarterly growth since Q1 of 2009. Durable goods orders for May also scored below par, though the negative sentiment was largely already priced. Also, Markit posted its preliminary reading on US services PMI for June, for a standing well above expectations at 61.2. A reading of 50 or higher means expansion, and vice versa. The greater the distance from 50, the more sizable an expansion or contraction.

The services sector accounts for about 80% of US GDP.

Stocks

US stocks added sizable gains yesterday, backed by the solid services figure. S&P 500 increased by 0.49% during Wednesdays Wall Street session, Dow 30 logged a 0.29% loss, while Nasdaq 100 was up 0.73% for an all-time-high close of 3827.33. Dow Jones Euro Stoxx 50 closed for a 0.94% drop on Wednesday, and by 7:15 today was down 0.04%.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, were unchanged on Wednesday at 785.02 tons, after adding some 3 tons earlier. The fund lost more than 4 tons last week, and is orbiting multi-year lows amid a recovering US economy.

Iraq

Iraq did not see an easing of tensions yesterday. Prime Minister Nouri Maliki dismissed a widely discussed and promoted idea of a government of national unity, including more Sunni and Kurdish representation. Such calls represented a “coup against the constitution and an attempt to end the democratic experience”, he warned, the BBC reported.

Meanwhile, Kirkuk, an oilfield center, which was occupied by forces of the autonomous Kurdish government after the Iraqi military fled, saw the first episode of violence yesterday, as a car-bomb killed several and injured dozens. The Kurdish state is seen as a bulwark against the Sunni onslaught, and is yet to see major confrontations with its new ISIS-dominated neighbors in Iraq.

Previously, insurgents took control of the country’s largest oil refinery, which supplies about a third of Iraq’s fuel demand. Elsewhere, militants seized all official border crossings in Syria and Jordan. The Jordanian army has been on full alert, protecting its borders against incursions, the Jordanian military said.

The Iraqi government insisted insurgents do not threaten Baghdad, nor the southern oilfields, which account for more than 75% of Iraqi oil output. Furthermore, the Iraqi oil minister said production and exports will actually increase over the next month.

Iraq is OPEC’s second-top oil producer, and exports some 3 million barrels per day from its main southern terminal at Basra.

Technical view

According to Binary Tribune’s daily analysis, in case Gold August futures on the COMEX manage to breach the first resistance level at $1 330.3, the contract will probably continue up to test $1 338.1. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 250.5.

If the contract manages to breach the first key support at $1 310.1, it will probably continue to slide and test $1 297.7. With this second key support broken, the movement to the downside may extend to $1 289.9.

Meanwhile, silver futures for July will see their first resistance level at $21.286. If it is breached, the contract will meet next resistance at $21.455, and then the third level at $21.746.

Silver will find its first support point at $20.826. Should it be breached, the second level of support is estimated at $20.535 and the third at $20.366.