Gold trading outlook: futures extend losses as stocks gain, Ukraine support limited

Gold futures were lower and losing during early trade in Europe today, after US stocks rallied on Wednesday, drawing investments away from havens. Elsewhere, the EU is expected to unveil its expanded sanctions list today.

Gold futures for delivery in August stood at $1 297.9 per troy ounce at 8:19 GMT in New York today, down 0.52%. Daily high and low were at $1 305.6 and $1 295.2 per troy ounce, respectively. The contract lost 0.12% yesterday, and is down some 0.4% so far this week.

“The rally in U.S. equities continues to be a headwind for gold, despite safe-haven buying providing some support to prices,” Victor Thianpiriya, commodity strategist at Australia & New Zealand Banking Group Ltd., wrote in a note, cited by Bloomberg.

Economic reports

The Eurozone posted key data today. Both manufacturing and services PMI for the Bloc were logged quite higher than expected, at 51.9 and 54.4, respectively. Anything above 50 is read for an expanding sector, and anything below means contraction, with the higher the margin from 50, the greater the pace of either expansion or contraction.

Germany was again leading the rally, while France, while also logging slightly better than forecast, is still in the backwaters with a contraction for factories and only minor gains for services.

Several US figures will also be released today. New home sales have probably dropped 5.3% on a monthly basis in June, for an annualized rate of 475 000, analysts say before the report. New home sales added 18.6% in May. Elsewhere, initial jobless claims for the week ended July 19 have probably slightly increased to 310 000, while Markit’s preliminary US manufacturing PMI reading for July is expected at 57.5, slightly more than before.

Earlier, the US posted robust CPI and existing home sales figures, supporting stocks and the dollar.

Stocks, dollar

US stocks extended this weeks gains, with S&P 500 and Nasdaq 100 recording all-time highs on Wednesday, logging a total of 0.5% and 1.1% in gains, respectively, so far this week. Dow 30 lost 0.16%, however, and is down some 0.1% this week.

Meanwhile the US dollar index, which measures the greenback against six other major currencies, added 0.07% yesterday and is up about 0.4% this week. By 7:58 GMT the gauge was down 0.06% at 80.84, pressured by EUs PMI readings, which boosted the euro.

Elsewhere, assets at the SPDR gold fund added half a ton yesterday, to stand at 805.44 tons. The fund is steadily regaining value, after being pressured to multi-year lows earlier this year.

Ukraine

Two Ukrainian military aircraft were shot down by rebels over eastern Ukraine late on Wednesday, near the MH17 crash site. Authorities reported that the warplanes were at an altitude of some 5 kilometers when they were shot down, suggesting a Buk missile was used to bring them down.

A rebel spokesman denied that the separatists possess such weaponry, adding that the Ukrainian jets were shot down by a short-range mobile anti-aircraft weapon.

The US and UK earlier expressed unwavering confidence that it was indeed a Soviet-era Buk missile which brought down the Malaysian airliner last week. The Boeing 777 was shot down over rebel-held territory in Ukraine last Thursday, killing all 298 people on board.

Elsewhere, the flight’s “black boxes” arrived in Farnborough, UK, to be examined. Officials said the devices were in good condition and expected to find promising leads as to the precise fate of the Malaysian airliner. The process is said to take about 2 days.

Sources added, however, that there were signs of tampering with evidence at the crash site, the BBC reported. Some bodies were moved, and parts of other aircraft were scattered among the crash site.

EU sanctions

The EU is expected to release the expanded list of sanctioned Russian and Ukrainian individuals and companies later today. The Bloc’s members states’ foreign ministers decided to step up measures against entities thought liable for obstructing peace in Ukraine. The measures are said to target Russian high-tech, energy and defense firms, in a move similar to that of the US last week.

Just hours before MH17 was shot down the US also widened the list of sanctioned entities. The list of companies included small-arms manufacturer Kalashnikov, Gazprom Bank, as well as giant Rosneft.

Technical view

According to Binary Tribune’s daily analysis, in case gold August futures manage to breach the first resistance level at $1 309.8, the contract will probably continue up to test $1 315.0. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 318.1.

If the contract manages to breach the first key support at $1 301.5, it will probably continue to slide and test $1 298.4. With this second key support broken, the movement to the downside may extend to $1 293.2.