Gold trading outlook: futures headed for weekly gain after Fed minutes, stocks down

Gold futures were slightly lower during early trade in Europe today. The precious metal logged a sizable gain on Thursday, as US stocks returned to losing, while the dollar also gained.

Gold futures for delivery in August traded for $1 337.2 per troy ounce at 6:33 GMT on the COMEX in New York today, down 0.15%. Daily high and low stood at $1 340.0 and $1 336.0 per troy ounce, respectively. The contract added 1.13% yesterday, reaching a three-month high of $1 346.8 per troy ounce, and so far this week has gained about 1.4%.

Meanwhile, silver contracts for September stood at $21.500 per troy ounce, for a drop of 0.04%. Daily high and low were at $21.565 peak, and $21.455 per troy ounce, respectively. The silver contract added 2.09% on Thursday, reaching a four-month peak at $21.630 per troy ounce, and so far this week silver has gained about 1.8%.

“Gold has been given a lift by the Fed minutes as the dollar comes under pressure,” Huang Wei, Shanghai-based analyst at Huatai Great Wall Futures Co., said for Reuters.

The log from the June 16 – June 18 meeting of the Federal Open Market Committee (FOMC) was released by the Fed yesterday. It revealed that an interest rate hike was still not on the table, confirming the Fed’s limited confidence in the US economic recovery, pressuring the dollar. Meanwhile, the account from the meeting also pointed the expected expiry of the Federal Reserve’s assets-purchasing stimulus program at October this year.

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.

The US posted jobless claims figures on Thursday. Initial applications for unemployment benefits for the week ended July 5 were reported at 304 000, exceeding expectations of a 315 000 standing, while continuing claims for the week through June 28 were put at 2.584 million, slightly above expectations.

Stocks, dollar

US stocks returned downwards during Thursdays session, with all major indices closing for losses. S&P 500 lost 0.41% as Wall Street trading closed, Dow 30 declined by 0.42%, while Nasdaq 100 was down 0.33%.

“Money seems to be shifting out of equities and into gold,” said one precious metals trader in Hong Kong, cited by Bloomberg.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, was almost unchanged on Thursday at 800.05 tons, after adding some 2 tons earlier this week. The fund has gained more than 16 tons over the last three 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, added 0.16% on Thursday. The gauge has lost about 0.2% so far this week, and by 6:29 GMT today it was down 0.01% at 80.17.

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 $1 349.0, the contract will probably continue up to test $1 358.8. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 370.8.

If the contract manages to breach the first key support at $1 327.2, it will probably continue to slide and test $1 315.2. With this second key support broken, the movement to the downside may extend to $1 305.4.

Meanwhile, silver futures for September will see their first resistance level at $21.719. If it is breached, the contract will meet next resistance at $21.929, and then the third level at $22.229.

Silver will find its first support point at $21.209. Should it be breached, the second level of support is estimated at $20.909 and the third at $20.699.