Gold trading outlook: futures headed for weekly losses as US posts robust data

Gold futures were slightly higher during early trade in Europe today. The precious metal was pressured by a best-in-eight-years reading on US jobless claims on Thursday and was looking set for a second weekly decline.

Gold futures for August delivery stood at $1 293.2 per troy ounce at 7:41 GMT in New York today, up 0.19%. Prices ranged from $1 291.0 to $1 294.8 per troy ounce. The contract lost 1.07% yesterday, and was down about 1.4% for the week.

“Gold fell through the psychological barrier of $1,300 an ounce,” Australia & New Zealand Banking Group Ltd. analysts wrote in a note today, cited by Bloomberg. “Positive economic data put a dampener on the gold market, as risk assets caught a bid and safe-haven buying dried up.”

New York silver was up 0.43% at $20.502 per troy ounce, platinum had added 0.05% for $1 474.45, while palladium had gained 0.40% and was at $874.40, with all precious metals headed for sizable weekly losses.

US economy

The US posted several key readings yesterday. Initial jobless claims for the week ended July 19 were reported at 284 000, reaching an eight-year low, boosting sentiment for the US ahead of payrolls and unemployment data next week.

“Claims are often volatile in the summer because of the timing of shutdowns at auto plants for retooling, but even so the downward trend in claims is evident and very positive for the labor market and the overall economy,” Stuart Hoffman, chief economist at PNC Financial Services Group, said for the Wall Street Journal. “The current level of claims is consistent with monthly job growth of above 200,000, and the July employment report should be another strong one.”

Factories also posted robust data, though slightly below expectations, with Markits preliminary manufacturing PMI reading for July at 56.3. 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.

New home sales, however, logged for a significant slowdown, dropping 8.1% in June for an annualized rate of 406 000.

Durable goods orders for June are to be reported later today, and analysts suggest a 0.4-0.5% gain overall, and 0.5-0.6% added for core orders, which exclude transportation items.

Stocks, dollar

US stocks saw calm trade yesterday, and remained at record or near-record levels. S&P 500 added 0.05% as trading on Wall Street closed on Thursday, logging a new record-high of 1 991.60. Dow 30 dropped 0.02%, while Nasdaq 100 lost 0.08%, though it also reached an all-time high of 3 997.00.

The US dollar index, which measures the greenbacks performance against six other major currencies, added 0.05% on Thursday and was up about 0.5% for the week. At 7:18 GMT today the gauge was up 0.02% at 80.96.

Meanwhile, assets at the SPDR gold fund dropped to a two-week low of 801.84, losing about 4 tons on Thursday.

Ukraine

The US said on Thursday, that it has evidence of Russia firing artillery across the border on Ukrainian military positions. The statement added, that Russia intends to deliver more and more powerful weaponry to separatists.

The West has widely accepted that it was pro-Russian rebels, who shot down the Malaysian airliner last week, using a Buk surface-to-air missile, supplied by Russia.

The Kremlin has not yet commented on these particular accusations, but has so far denied all allegations in relation with the fighting in eastern Ukraine.

During the Crimean crisis, Russian President Vladimir Putin also frequently denied any Russian involvement, only to later admit that it was indeed Russian soldiers, who drove off the Ukrainian military and took control of the peninsula.

In separate developments, Ukrainian Arseniy Yatsenyuk resigned. It is not yet known if President Petro Poroshenko will accept the resignation.

Meanwhile, the EU is expected to unveil the expanded list of sanctioned entities today. The list will include 15 individuals and 18 companies. 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, Gazprombank, a leading Russian bank, as well as state-owned energy giant Rosneft.

Technical view

According to Binary Tribune’s daily analysis, in case gold August futures manage to breach the first resistance level at $1 301.8, the contract will probably continue up to test $1 312.7. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 319.9.

If the contract manages to breach the first key support at $1 283.7, it will probably continue to slide and test $1 276.5. With this second key support broken, the movement to the downside may extend to $1 265.6.