Gold trading outlook: futures climb ahead of the weekend, stocks soar

Gold futures were higher during early trade in Europe today. The US mark Independence Day, which will keep activities on the market muted. The US posted significantly improving employment figures yesterday, pressuring havens.

Gold futures for delivery in August traded for $1 323.8 per troy ounce at 7:34 GMT on the COMEX in New York today, up 0.24%. Daily high and low stood at $1 324.1 and $1 319.5 per troy ounce, respectively. The contract lost 0.77% on Thursday, erasing gains from earlier in the week, when a three-month high of $1 334.9 per troy ounce was reached.

Meanwhile, silver contracts for September stood at $21.270 per troy ounce, for a gain of 0.63%. Daily high and low were at $21.280 and $21.125 per troy ounce, respectively. The contract dropped 0.77% yesterday, also negating earlier gains, after a three-month high of $21.335 per troy ounce was reached on Tuesday.

“The dollar’s strength, helped by the positive U.S. jobs data, is weighing on gold,” Lv Jie, analyst at Cinda Futures Co., said for Bloomberg. “The longer-term outlook for a continued improvement in the U.S. economy will keep gold under pressure.”

US reports

Key US employment data was revealed yesterday. Nonfarm payrolls for June increased by 288 000, which is a four-year peak. ADP posted a 281 000 figure on Wednesday, and analysts had earlier suggested a growth of about 210 000. The unemployment rate dropped to 6.1%, which is the lowest rate since September 2008.

“The job numbers are telling us that the economy is healthy, and people don’t need a lot of safe haven going forward,” Alfonso Esparza, a senior currency analyst in Toronto at Oanda Corp., said in a telephone interview for Bloomberg. “Gold will probably now start weakening again.”

Meanwhile, initial jobless claims for the week ended June 28 were slightly more than before at 315 000, and continuing applications for benefits for the week through June 21 were at 2.579 million, also logging a minor increase.

Also yesterday, ISM posted its non-manufacturing PMI for June, for a reading of 56.0, slightly below expectations and the figure from last month, but standing for a sizable growth in the sector nonetheless. 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. The services sector accounts for about 80% of US GDP.

Previously, ISM revealed its June manufacturing for the US yesterday, for a slightly worse-than-expected growth, but still standing for a considerable growth for the factory sector.

Stocks, dollar

US stocks logged sizable gains during Thursdays session. S&P 500 added 0.55% as trading on Wall Street closed yesterday, for a record-high close of 1985.44. Dow 30 logged a 0.55% gain, also closing record-high at 17 068.26, while Nasdaq 100 added 0.61% for an all-time-high close of 3923.01. Dow Jones Euro Stoxx 50 closed for a 1.01% gain.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, were unchanged on Thursday, after they 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.

The US Dollar Index, which measures the greenback’s performance against six other major currencies, was up 0.38% yesterday, bolstered by the payrolls figure. At 7:31 GMT today the gauge was up 0.03% at 80.28.

ECB

The European Central Bank (ECB) announced its benchmark interest rate and deposit rate earlier today. The main lending rate was kept at 0.15% after it was reduced from 0.25% the previous month, while the deposit rate for commercial banks which keep their money at the ECB was bumped into positive ground again, at 0.10%. Last month it was pushed to -0.10%, which meant the ECB was taxing banks for keeping their money, in a bid to prompt increased consumer lending.

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 $1 329.9, the contract will probably continue up to test $1 339.3. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 349.5.

If the contract manages to breach the first key support at $1 310.3, it will probably continue to slide and test $1 300.1. With this second key support broken, the movement to the downside may extend to $1 290.7.

Meanwhile, silver futures for September will see their first resistance level at $21.205. If it is breached, the contract will meet next resistance at $21.472, and then the third level at $21.715.

Silver will find its first support point at $20.895. Should it be breached, the second level of support is estimated at $20.652 and the third at $20.485.