Gold trading outlook: futures add ahead of key US and Eurozone announcements

Gold futures were higher during early trade in Europe today, as traders await key reports from the US and Eurozone today and later this week. The US dollar dropped yesterday, while stocks were mixed. SPDR assets regained a sizable chunk.

Gold futures for delivery in August traded for $1 326.4 per troy ounce at 7:41 GMT on the COMEX in New York today, up 0.33%. Daily high and low stood at $1 334.9 and $1 324.0 per troy ounce, respectively, reaching a three-month high. The contract added 0.15% yesterday, after a gain of about 0.2% last week.

Meanwhile, silver contracts for September stood at $21.105 per troy ounce, for a gain of 0.23%. Daily high and low were at $21.185 and $21.050 per troy ounce, respectively. The contract dropped 0.37% yesterday, after some 0.6% were added last week, when a three-month high of $21.250 was reached.

“This quarter, we expect gold to remain elevated or even possibly climb due to multiple uncertainties,” Howie Lee, investment analyst at Phillip Futures, said for Reuters, addressing concerns over the U.S. economic recovery and geopolitical tensions as support for gold.

US outlook

ISM’s final reading on manufacturing PMI for June will be released today. Analysts predict a standing of 55.8, after the 55.4 of May.

A separate report on May factory orders is due on Wednesday, which are also projected to have grown. ISM will post its non-manufacturing PMI for June on Thursday, and experts suggest accelerating growth in the services sector as well.

Thursday will feature the key report on employment for June. The unemployment rate is set for an unchanged 6.3%, while nonfarm payrolls have probably added 210 000 – 213 000, after a 217 000 figure for May. Payrolls are a leading indicator for the overall health of the economy.

The US posted pending home sales and Chicago PMI yesterday, for sizable growth in sales and a continued massive expansion of economic activities in Chicago.

Elsewhere, the Eurozone, which consumes 14% of all oil, will post unemployment rate and manufacturing PMI for May later today. Experts suggest unemployment will remain unchanged at 11.7%, while factories probably also expanded as quickly as before, for a reading of 51.9.

Thursday will see services PMI for June and retail sales for May, as well as a key European Central Bank (ECB) decision on the benchmark lending rate and deposit rates. The ECB cut both rates last time, for a 0.15% central lending rate and -0.10% deposit rate, which taxes commercial banks if they keep their money out of circulation.

“If the economic data is positive, then people will deduce that it will give the Fed more room to potentially raise interest rates, which is not so good for gold,” Gavin Wendt, founder and senior resource analyst at Mine Life Pty in Sydney, said for Bloomberg.

Stocks

US stocks posted mixed results yesterday. S&P 500 dropped 0.04% as trading on Wall Street closed on Monday, Dow 30 logged a 0.15% loss, while Nasdaq 100 added 0.13% for an all-time-high close of 3849.48. Dow Jones Euro Stoxx 50 closed for a 0.21% gain.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, gained more than 5 tons on Monday for a standing of 790.70 tons. The fund added 3 tons last week as well. Assets, however, are still near multi-year lows amid a recovering US economy.

The US Dollar Index, which measures the greenback’s performance against six other major currencies, was down 0.36% yesterday, after a further 0.5% loss last week. At 7:45 GMT today the gauge was up 0.06% at 79.86 and near a six-week low.

Meanwhile, the euro, the dollar’s main competitor, added 0.36% on Monday after a 0.4% gain last week. By 7:46 today the pair was down 0.03% at 1.3689 EUR/USD and also near a six-week high.

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 $1 331.3, the contract will probably continue up to test $1 340.5. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 350.7.

If the contract manages to breach the first key support at $1 311.9, it will probably continue to slide and test $1 301.7. With this second key support broken, the movement to the downside may extend to $1 292.5.

Meanwhile, silver futures for September will see their first resistance level at $21.256. If it is breached, the contract will meet next resistance at $21.375, and then the third level at $21.581.

Silver will find its first support point at $20.851. Should it be breached, the second level of support is estimated at $20.645 and the third at $20.486.