Gold trading outlook: futures climb ahead of FOMC minutes; stocks, dollar lower

Gold futures were climbing during early trade in Europe today, as traders await the release of FOMCs June meeting. US stocks and the dollar continued downwards on Tuesday, while SPDR assets gained again.

Gold futures for delivery in August traded for $1 324.9 per troy ounce at 7:04 GMT on the COMEX in New York today, up 0.64%. Daily high and low stood at $1 327.2 and $1 318.7 per troy ounce, respectively. The contract dropped 0.04% on Tuesday, after a further 0.27% loss the previous session.

Meanwhile, silver contracts for September stood at $21.155 per troy ounce, for a gain of 0.68%. Daily high and low were at $21.200 and $21.0656 per troy ounce, respectively. The silver contract was unchanged yesterday after dropping 0.28% on Monday.

“Stocks pulled back and the dollar remained weak, which supports gold,” Sarah Xie, Hong Kong-based analyst at Wing Fung Financial Group Ltd, said for Bloomberg. “Though investors expect an early rate hike, the Fed Reserve might be conservative. Gold may rebound if the minutes let investors down.”

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.

Stocks, dollar

US stocks continued downwards on Tuesday, with all major indices closing for sizable losses. S&P 500 dropped 0.70% as Wall Street trading closed on Monday, Dow 30 declined by 0.69%, while Nasdaq 100 was down 1.19%.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, added about 2 tons on Tuesday to stand at 800.28 tons, after gaining more than 16 tons over the last two weeks. 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, dropped 0.06% on Tuesday, after a further 0.10% drop on Monday, and by 8:19 GMT today was down 0.02% at 80.20.

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 $1 323.4, the contract will probably continue up to test $1 330.2. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 334.8.

If the contract manages to breach the first key support at $1 312.0, it will probably continue to slide and test $1 307.4. With this second key support broken, the movement to the downside may extend to $1 300.6.

Meanwhile, silver futures for September will see their first resistance level at $21.174. If it is breached, the contract will meet next resistance at $21.334, and then the third level at $21.424.

Silver will find its first support point at $20.924. Should it be breached, the second level of support is estimated at $20.834 and the third at $20.674.