Gold trading outlook: futures climb ahead of more US data

Gold futures were slightly higher during early trade in Europe today, after equities were hurt by a worse-than-expected Chinese services PMI reading. Investors now eye the ISMs key US services PMI report later today.

Gold futures for December settlement traded for $1 292.6 per troy ounce at 8:04 GMT on the COMEX in New York today, up 0.29%. Prices ranged from $1 288.1 to $1 293.4 per troy ounce. The contract dropped 0.46% on Monday, after losing some 0.8% last week.

“We suspect that while political outbreaks provide the occasional jolt, it is the economic crises that seem to have more long-lasting impact,” INTL FCStone analyst Edward Meir said for Reuters. “Over the course of August, we see prices trading between $1,260 and $1,320.”

Silver for September delivery was up 0.20% to trade at $20.273 per troy ounce, while palladium had added 0.06% at $855.6. October platinum traded at $1 465.50, down 0.08%.

Economic outlook

A key reading on the Chinese economy was reported earlier today. HSBC logged its services PMI reading for July at 50.0, well below last months 53.1 standing, and significantly under the governments figure of 54.1, which was posted on Sunday. The worse-than-expected reading prompted a retreat for Asian equities, supporting gold.

“Gold got a bit of a lift from the stock markets, which were hurt by the China services PMI,” Xu Wenyu, Shanghai-based analyst at Huatai Great Wall Futures, said for Bloomberg. “Positive U.S. data will bring the focus back to the outlook for higher interest rates, and that will weigh on gold.”

A couple of US economic gauges will be reported today. Factory orders for June will be reported, and analysts expect a monthly growth of 0.6%. More importantly, ISM will post its reading on US services PMI for July today. The gauge is projected to stand at 56.5, slightly more than previously, meaning a greater pace of expansion for the services sector, which generates about 80% of US GDP.

The Eurozone will report retail sales for June today, with forecasts of 0.4% monthly growth. Also today, services PMI for the EU will be posted, and analysts suggest the reading will be unchanged at 54.4, which would signal a sizable growth for the services sector ahead of the crucial ECB interest rate decision on Thursday.

Previously, last week featured a number of key readings, with the US reporting significant Q2 GDP growth, and disappointing employment figures, while the EU projected declining CPI for July, with the advanced reading logged at 0.4%.

US stocks, dollar

US stocks opened the week with gains throughout, with all three major indices closing Mondays session for sizable gains. S&P 500 was up 0.72%, Dow 30 Industrial had gained 0.46%, while Nasdaq 100, which excludes financial institutions, was up by 0.75%.

Meanwhile, the US Dollar Index, which measures the strength of the US dollar against six other major currencies, added 0.04% on Monday, and by 7:38 GMT today the gauge was up 0.01% at 81.42.

Elsewhere, holdings at the SPDR Gold Trust, the largest exchange-traded gold fund, dropped about 1.8 tons to stand at 800.05 tons, the lowest level in almost a month.

Gaza

Israel said it is withdrawing all its troops to defensive positions outside the Gaza strip, with the announcement coming just moments before the latest ceasefire was set to begin.

Israel said the main goal of its incursion, the destruction of Hamas’ tunnels into Israel, was achieved. The Israeli military said they had killed some 900 “terrorists”.

Palestinian officials say more than 1 800 Palestinians have been killed in the 28-day conflagration of the conflict, most of them civilians, while more than 9 000 were injured.

The UN reported on a number of occasions that Israel shelled its shelters, killing civilians. Israel has said it is investigating the “incidents”. UN Secretary-General, Ban Ki-moon welcomed Israel’s withdrawal, and called for all parties to resume talks.

Technical support and resistance levels

According to Binary Tribune’s daily analysis, gold December future’s central pivot point on the COMEX stands at $1 290.8. In case futures manage to breach the first resistance level at $1 294.5, the contract will probably continue up to test $1 300.2. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 303.9.

If the contract manages to breach the first key support at $1 285.1, it will probably continue to slide and test $1 281.4. With this second key support broken, the movement to the downside may extend to $1 275.7.