Gold trading outlook: futures steady ahead of US payrolls, dollar gains

Gold futures were steady during early trade in Europe today, after a drop on Wednesday. The US dollar was supported by the Fed remaining on track with a cut in monetary stimulus. Meanwhile, the conflicts in Iraq and Gaza continued offering background support.

Gold futures due in December traded at $1 297.3 per troy ounce at 8:52 GMT in New York, up 0.03%. Prices ranged $1 292.9 to $1 298.6 per troy ounce. The contract dropped 0.28% on Wednesday, and was down about 0.6% for the week.

“Positive U.S. economic data is good for the dollar and bad for gold,” Lv Jie, analyst at Cinda Futures Co., said for Bloomberg. “Geopolitical concerns still exist for support but the longer-term downtrend is unchanged as the U.S. moves toward tighter monetary policy.”

Silver for September had added 0.84% to trade at $20.767 per troy ounce, while palladium was up 0.13% at $881.30. October platinum was down 0.09% at $1 480.75.

US economy

The Fed concluded its two-day meeting yesterday, announcing a decision to cut monthly assets purchases by another $10 billion to $25 billion, backing on a solid recovery. The move was largely expected and extrapolates to a close of the stimulus program in late 2014. The program was introduced in late 2012 to pump fresh money into the then-slacking US economy.

Meanwhile, policymakers also kept the benchmark interest rate unchanged at 0.25%, adding that a hike was not to happen for a “considerable time after the asset-purchasing program had concluded”, which is in line with market expectations.

The US Bureau of Economic Analysis posted a 4.0% preliminary Q2 GDP growth, well above the expected 3.0%. Also, the reading for Q1 was revised from -2.9% to -2.1%, adding to positive sentiment for the worlds largest economy.

New non-farm payrolls for July will be reported tomorrow, after ADP posted its advanced reading yesterday, suggesting the US economy has added 218 000 new jobs, less than the forecast figure of 230 000. Last months 288 000 figure was an eight-year high.

“You have an economy on the mend. If you get a good jobs report on Friday, youll see more of a sentiment in the market for ending stimulus faster or raising rates” Frank McGhee, senior precious metals dealer with Integrated Brokerage Services in Chicago, said for the Wall Street Journal.

Stocks, dollar

US stocks posted mixed results yesterday. S&P 500, the broadest measure for US stocks, was little changed as trading on Wall Street closed, adding 0.01%. Dow 30 Industrial was down 0.19%, while Nasdaq 100, which excludes financial institutions, added 0.43%.

Meanwhile, the US Dollar Index added 0.26% on Wednesday. By 8:44 GMT today the gauge was unchanged at 81.51, standing for a weekly gain of about 0.5%.

Elsewhere, assets at the SPDR Gold Trust were unchanged for a fifth session at 801.84 tons on Wednesday, after dropping some 6 tons last week.

Ukraine, Gaza

Belarus is to host talks between Ukraine, Russia and the Organization for Security and Co-operation in Europe (OSCE) today. A senior rebel leader is also said to attend, in the latest attempt to deescalate the crisis.

Fighting in Ukraine, including at the MH17 crash site, continued on Wednesday. An OSCE team of investigators could not reach the site, stopped by armed rebels.

Meanwhile, the US and EU imposed new sanctions on Russia this week, targeting the energy, defense and high-tech sectors. The Kremlin saw the measures as “destructive and short-sighted”.

The latest round of sanctions comes in light of the downing on Malaysian passenger jet, flight MH17, which was shot down over rebel-held territory in eastern Ukraine. The West has accused the rebels for the act, and Moscow for supplying the insurgents with the weaponry.

The Kremlin has denied any involvement and has instead put the blame for the incident on the Ukrainian military.

Elsewhere, fighting continued in Gaza, with Israeli shells hitting a crowded market on Wednesday, killing at least 17 and injuring dozens. An Israeli shell hit a UN-run shelter earlier, killing at least 15. UN spokesman Chris Gunness saying “the world stands disgraced” by the attack. Mr Gunness told the BBC that Israel had been told 17 times that the school in the Jabaliya refugee camp was housing civilian refugees.

Israel said it is investigating the issues. “If we find that it was errant fire from Israel Im sure we will apologize,” Israels government spokesman Mark Regev said.

The Palestinian death toll now exceeds 1 350, mostly civilians and including women and children, according to the Palestinian Authority Health Ministry. 56 Israeli soldiers and two civilians have also died since the conflict sparked back to life earlier this month.

Technical view

According to Binary Tribune’s daily analysis, in case gold December futures manage to breach the first resistance level at $1 303.7, the contract will probably continue up to test $1 310.4. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 315.7.

If the contract manages to breach the first key support at $1 291.7, it will probably continue to slide and test $1 286.4. With this second key support broken, the movement to the downside may extend to $1 279.7.