Gold trading outlook: futures headed for weekly loss ahead of US jobs data, stocks slump

Gold futures traded slightly higher during early hours in Europe today, ahead of a key report on US payrolls. The precious metal endured pressure from a number of economic readings this week, while battles in Gaza and developments in Ukraine offered some background support.

Gold futures for delivery in December, the most traded gold contract in New York, traded at $1 284.9 per troy ounce at 8:49 GMT today, up 0.16%. Daily high and low were at $1 286.7 and $1 283.2 per troy ounce, respectively. The contract dropped 1.09% yesterday for a weekly loss of about 1.6%.

“Gold prices continued to pull back as stronger-than-expected reports on the U.S. economy damped demand for safety plays,” Sarah Xie, Hong Kong-based analyst at Wing Fung Financial Group Ltd., said for Bloomberg. “Investors are reluctant to take big positions ahead of the U.S. jobs data.”

Silver for September was unchanged at $20.413 per troy ounce, while palladium was down 0.10% at $872.80. Meanwhile, October platinum was down 0.01% to trade at $1 465.10.

US economy

New non-farm payrolls for July will be reported today, after ADP posted its advanced reading on Tuesday, suggesting the US economy has added 218 000 new jobs, less than the forecast figure of 230 000. Last month’s 288 000 figure was an eight-year high. Meanwhile, the unemployment rate will probably be unchanged at the six-year low of 6.1%.

Other key figures will also be posted today. ISM will report its reading on US manufacturing PMI for July, expected to be slightly higher at 56.0. Personal spending for June has probably added 0.4% on a monthly basis. On an annual basis personal expenditures are projected to have added 1.4% in June.

Initial jobless claims for the week through July 26 were logged at 302 000 yesterday, highlighting the Fed’s expressed concern with the instability of the US labor market, ahead of the payrolls report. Also, Chicago PMI was significantly below expectations at 52.6, after analysts had suggested a reading of 63.0.

Previously, 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 world’s largest economy.

Dollar, stocks

The US Dollar Index was unchanged yesterday, though it reached a one-year peak at 81.66. By 8:30 the gauge was up 0.07% at 81.58.

Meanwhile, US stocks slumped yesterday, pressured by readings on jobless claims and the surprisingly low Chicago PMI. S&P 500 dropped 2.00% as trading on Wall Street closed, Dow 30 had lost 1.88%, while Nasdaq 100 was down 2.10%.

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

Gaza, Ukraine

A 72-hour humanitarian ceasefire was announced in Gaza. The truce comes after some of the most bloody days since the conflict reignited earlier in July.

Israeli tank fire and air strikes killed at least 15 more Palestinians last night, while 17 were killed and dozens injured when Israel bombed a busy market earlier. A UN-run shelter was also under attack this week, killing at least 15, including women and children. Israel said it is investigating the UN shelter attack, and said it would apologize if it found responsibility with the Israeli forces.

Overall, more than 1 400 Palestinians, most of them civilians, are reported dead, according to the Palestinian Health Ministry, while 61 Israeli soldiers had also died.

Elsewhere, rebels in eastern Ukraine ambushed a military convoy late on Thursday, killing at least 10 soldiers and destroying some 20 vehicles. The clash took place near the MH17 crash site. The site was visited by international observers yesterday, after Kiev announced a one-day unilateral ceasefire, to allow the Dutch-led team to examine the site, after repeatedly unsuccessful attempts earlier.

Meanwhile, separatist representatives are due to meet with Ukrainian and other delegations in Minks, Belarus, today. The talks come after the US and EU imposed more and more potent sanctions on Moscow, limiting relations in the sectors of defense, energy, finance and high-tech. The Kremlin denounced the measures, dubbing them “destructive and short sighted”.

The West intensified actions against Moscow, in light of the Malaysian airliner being shot-down over rebel-held territory in Ukraine, killing all 298 people on board. The casualties were mostly Dutch and Australian. The West claims rebels shot down the airliner, using a Russian-supplied Buk missile, and accuses Russia of aiding the separatists. Moscow has denied any involvement with the conflict, and instead put the blame of the MH17 incident, and of the conflict in general, on the Western-backed Ukrainian authorities.

Technical view

According to Binary Tribune’s daily analysis, in case gold December futures manage to breach the first resistance level at $1 294.0, the contract will probably continue up to test $1 305.1. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 311.5.

If the contract manages to breach the first key support at $1 276.5, it will probably continue to slide and test $1 270.1. With this second key support broken, the movement to the downside may extend to $1 259.0.