Gold futures were little changed during early trade in Europe today, as investors look to upcoming US economic data to reinforce bullish sentiment for the dollar, pressuring commodities, and especially gold.
Gold futures for December delivery on the Comex in New York traded at $1 217.6 per troy ounce by 7:52 GMT, down 0.02%. Prices ranged from $1 214.7 to $1 220.7 per troy ounce. The contract added 0.1% on Monday, though it also reached a nine-month low at $1 208.8.
Silver for December delivery stood for a 0.39% daily drop at $17.705 per troy ounce, while palladium was up 0.52% at $807.30. October platinum was up 0.32% at $1 334.50.
“We’re getting a bit of a bounce today but the downward trend hasn’t changed,” Zhu Siquan, an analyst at GF Futures Co. from Guangzhou, China, said for Bloomberg. “Economic and geopolitical uncertainties still exist but the overall expectation is for an improvement in the U.S.”
The US reported somewhat disappointing housing data on Monday. Existing home sales logged a 1.8% drop in the annualized rate in August to 5.05 million. Home sales are a key metric of the retail sector, which is the biggest single market in the US, accounting for ~13% of US GDP.
More key US gauges will be reported this week, with durable goods orders set for a rebound after last month’s all time-high increase. Orders soared 22.6% on a monthly basis in July on the back of massive orders for Chicago-based airplane-manufacturer Boeing. Now orders are looking at a ~18% decrease on a monthly basis, still a significantly lower drop than the jump last month.
GDP figures on Friday are projected to confirm a bullish story for the dollar and US stocks, with the preliminary reading on quarterly growth for Q214 set to log at 4.6%, beating the earlier flash figure of 4.2%.
Betting on an improving recovery in the US, the Fed announced a steeper-than-earlier rate rise in 2015 last week, heavily supporting the US dollar and weighing on dollar-denominated commodities, such as gold.
The Federal Open Market Committee (FOMC) September meeting produced another $10bn cut in monthly government spending on quantitative easing (QE), keeping on track to close the program at its next meeting. Meanwhile the central lending rate was also kept at 0.25%. However, the targeted rate by the end of 2015 was increased from 1.125% to 1.375%, boosting the greenback to a new four-year peak.
“The strength of the dollar continues to put pressure on all precious metals, with gold looking likely to make a play for $1 200 in the coming sessions,” MKS Group said in a note cited by Reuters.
Reflecting on the diminishing appeal of gold, assets at the SPDR Gold Trust, the largest exchange-traded gold-backed fund, dropped 774.65 on Monday, the lowest level since December 2008.
Last week “precious metals saw [$263 million pulled out], the largest outflows in over a year, with silver and both long and short gold exchange-traded products seeing outflows,” Danny Laidler, head of ETF Securities in Australia and New Zealand, said for Reuters.
Technical support and resistance levels
According to Binary Tribune’s daily analysis, December gold’s central pivot point on the COMEX stands at $1 215.9. In case futures manage to breach the first resistance level at $1 223.0, the contract will probably continue up to test $1 228.1. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 235.2.
If the contract manages to breach the first key support at $1 210.8, it will probably continue to slide and test $1 203.7. With this second key support broken, the movement to the downside may extend to $1 198.6.
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