Gold trading outlook: futures steady before key US reports, Eurozone rate decision ahead

Gold futures were little changed during early hours in Europe today. Trade will probably remain muted ahead of key reports and announcements from the US and the Eurozone this week. SPDR assets soared, while stocks advanced confidently yesterday.

Gold futures for delivery in August traded for $1 327.2 per troy ounce at 8:05 GMT on the COMEX in New York today, up 0.05%. Daily high and low stood at $1 328.6 and $1 325.2 per troy ounce, respectively. The contract added 0.35% on Tuesday, reaching a three-month high of $ 1 334.9 per troy ounce, after a further 0.15% gain on Monday.

Meanwhile, silver contracts for September stood at $21.095 per troy ounce, for a loss of 0.10%. Daily high and low were at $21.150 and $21.040 per troy ounce, respectively. The contract added 0.29% yesterday, also reaching a three-month high of $21.275 per troy ounce, after having dropped 0.37% on Monday.

“The weaker dollar has aided the ascent but gold is now looking increasingly overbought and the rally has put off price-sensitive physical buyers,” Xia Yingying, analyst at Nanhua Futures Co. in Hangzhou, China, said for Bloomberg.

US economy

The US will post several key economic reports today. ADP will reveal its reading on employment for June, ahead of the official report on Thursday. Factory orders for May will also be revealed today, and analysts suggest a -0.3% figure on a monthly basis, after the 0.7% growth in April.

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. Also tomorrow, ISM will post its non-manufacturing PMI for June, and experts suggest accelerating growth in the services sector as well.

Previously, ISM revealed its June manufacturing for the US yesterday, for a slightly worse-than-expected growth, but sizable growth nonetheless.

Stocks

US stocks logged sizable gains during Tuesdays session. S&P 500 added 0.67% as trading on Wall Street closed yesterday, for a record-high of 1973.32. Dow 30 logged a 0.77% gain, while Nasdaq 100 added 1.17% for an all-time-high close of 3894.33. Dow Jones Euro Stoxx 50 closed for a 0.63% gain.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, gained almost 6 tons on Tuesday and stand at 796.39 tons. The fund scored another massive gain of more than 5 tons on Monday, after adding 3 tons last week as well. Assets were recently pressured to multi-year lows by a recovering US economy.

“Two days of big flows into the fund is supporting prices,” said one Hong Kong-based trader, cited by Reuters. “This is a good sign as physical demand in Asia is weak because of the rise in prices.”

The US Dollar Index, which measures the greenback’s performance against six other major currencies, was up 0.04% yesterday, losing about 0.8% over the previous six sessions. At 8:03 GMT today the gauge was up 0.04% at 79.88.

Meanwhile, the euro, the dollar’s main competitor, dropped 0.09% on Tuesday, after a 0.8% gain for the previous six sessions. By 8:05 today the pair was down 0.08% at 1.3669 EUR/USD and also near a six-week high.

Eurozone

The Eurozone also posted data on Tuesday. Unemployment rate for May was logged at an unchanged 11.6%, while manufacturing PMI also for May was at 51.8, slightly below expectations, but still standing for an expansion. A reading of 50 or higher means expansion of economic activities, and vice versa. The bigger the distance from 50, the greater the pace of contraction or expansion.

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.

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 $1 333.0, the contract will probably continue up to test $1 339.4. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 343.9.

If the contract manages to breach the first key support at $1 322.1, it will probably continue to slide and test $1 317.6. With this second key support broken, the movement to the downside may extend to $1 311.2.

Meanwhile, silver futures for September will see their first resistance level at $21.245. If it is breached, the contract will meet next resistance at $21.372, and then the third level at $21.470.

Silver will find its first support point at $21.020. Should it be breached, the second level of support is estimated at $0.922 and the third at $20.795.