Gold trading outlook: futures steady below $1 300

Gold futures were little changed during early trade in Europe today. The precious metal was pressured lower last week, while stocks slumped, as the US posted mixed economic data. Fighting in Gaza continued to offer some background safe haven demand.

Gold futures for December settlement added 0.06% by 11:20 GMT in New York today, to trade at $1 295.6 per troy ounce. Prices ranged from $1 292.4 to $1 296.4 per troy ounce. The precious metal lost some 0.8% last week.

“Even though theres tension going on in Gaza and Ukraine, its on the back burner,” Thomas Capalbo, a metals broker with Newedge in New York, said for the Wall Street Journal. “The U.S. economy and the Fed are whats directing gold.”

Silver for September settlement had added 0.44% to trade at $20.460 per troy ounce, while palladium was up 0.57% at $869.50. October platinum was up 0.49% at $1 470.5.

US economy

The Institute of Supply Management will post its read services PMI reading for July tomorrow, after logging a significantly quicker expansion of US factory activity in July last week. The Institute’s figure is forecast at 56.5, standing for an accelerating growth for the services sector, which accounts for 80% of US GDP. ISM’s report will come shortly before the release of US factory orders log for June, which is expected to reveal slight monthly growth at 0.6%.

Last week, policymakers decided to keep the benchmark interest rate unchanged at 0.25%, saying that they still see weakness in the labor market, and that a hike was not to happen for a “considerable time after the asset-purchasing program had concluded”. The Fed kept on track with the cuts to purchases volumes, decreasing them to $25 billion, leading to a close of the program in late 2014.

“The U.S. has entered a monetary-tightening cycle and gold will continue to face downward pressure in the mid to longer term,” Zhang Lin, analyst at Yongan Futures Co. in Hangzhou, China, said for Bloomberg.

Jobless claims and payrolls reports, which were released after the meeting, confirmed the Fed’s concern, as weekly jobless claims were significantly higher than expected, while payrolls thoroughly disappointed, adding just 209 000.

“Gold had a reprieve as the dollar pulled back after the payrolls data,” Lin added.

Meanwhile, consumer confidence grew, according to the Conference Board, reaching a seven-year peak, while the Bureau of Economic Analysis posted a 4.0% quarterly GDP growth, stoking further confidence for the US.

Dollar, stocks

The US Dollar Index, which measures the greenback’s performance against six other major currencies, was up 0.04% at 81.33 by 8:03 GMT today. The gauge closed some 0.3% higher for the week on Friday.

Meanwhile, US stocks saw significant losses last week. Dow 30 closed about 2.8% lower, Nasdaq 100 dropped 2.1% and S&P 500 was down 2.70%, as trading on Wall Street closed on Friday.

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

Gaza

The embattled Palestinian enclave in Gaza was offered a brief respite earlier today, as the Israeli military announce a unilateral 7-hour humanitarian ceasefire. The Israeli military added, however, that the truce does not include the town of Rafah, and that its soldiers will return fire if attacked.

The partial suspension of operations comes after more people were killed over the weekend. Yet another UN-run shelter was shelled by Israel on Sunday, killing at least 10 people. UN Secretary-General Ban Ki-moon described the attack as “a moral outrage and a criminal act”, the BBC reported.

The attack is only the last in a number of “incidents”, in which Israeli forces attack civilian shelters, run by the UN, killing dozens every time. Israel said that it is not sure its their fire in all of the attacks, and has added in a number of cases that it was their soldiers only returning fire to the origin of militant attacks. Israel also said it is investigating the “incidents”, and that it will apologize if its forces were guilty of misconduct.

The death toll now exceeds 1 800 Palestinians, most of them civilians, while more than 9 000 have been injured, the Palestinian health ministry has said. Israel has lost 66 soldiers and two civilians.

“The UN says Israel has killed around 330 Palestinian children in under 30 days,” the BBCs Orla Guerin reported from Gaza.

Technical view

According to Binary Tribune’s daily analysis, gold December futures central pivot point stands at $1 291.4. In case futures manage to breach the first resistance level at $1 301.8, the contract will probably continue up to test $1 308.8. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 319.2.

If the contract manages to breach the first key support at $1 284.4, it will probably continue to slide and test $1 274.0. With this second key support broken, the movement to the downside may extend to $1 267.0.