Gold trading outlook: futures lower after US holiday, FOMC minutes this week

Gold futures were down during early trade in Europe today. Stocks and the US dollar scored sizable gains last week, as US payrolls thrashed expectations and lifted sentiment for the worlds top economy. Minutes from the FOMC June meeting will be released on Wednesday.

Gold futures for delivery in August traded for $1 315.2 per troy ounce at 9:04 GMT on the COMEX in New York today, down 0.46%. Daily high and low stood at $1 321.7 and $1 313.2 per troy ounce, respectively. The contract added about 0.2% last week, reaching a three-month high of $1 334.9 per troy ounce.

Meanwhile, silver contracts for September stood at $20.995 per troy ounce, for a drop of 0.97%. Daily high and low were at $21.215 and $20.935 per troy ounce, respectively. The silver contract also added about 0.2% last week, and also reached a three-month high of $21.335 per troy ounce.

“Gold is under pressure from the dollar as the U.S. economy continues to show signs of improvement,” Zhu Siquan, an analyst at GF Futures Co. in Guangzhou, China, said for Bloomberg. “Prices remain in range as there are still uncertainties in the rest of the world.”

Minutes from the Federal Open Market Committee (FOMC) June meeting will be released this Wednesday. The log is closely monitored by traders, since it reveals the plans and direction of the US most-senior monetary policy body.

The meeting, which took place some three weeks ago, resulted in decisions to keep the benchmark lending rate unchanged at 0.25%, while reducing assets purchases through its monetary stimulus program by another $10 billion to $35 billion a month, expressing limited confidence in the US economic recovery.

US reports

Key US employment data was revealed last week. 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.

Also, 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.

Stocks, dollar

US stocks logged sizable gains during Thursday’s session, which was the last for the week due to the July 4 holiday. S&P 500 added 0.55% as trading on Wall Street closed for the week, 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 Friday, 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, unchanged on Friday, and logged a weekly gain of 0.25%, bolstered by the payrolls figure. By 8:56 GMT today the gauge was down 0.03%.

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.