Gold trading outlook: futures pressured by robust dollar

Gold slipped for a fourth session on Thursday as the precious metal failed to shake off pressure by strong US economic data.

Comex gold for delivery in April was down 0.02% at $1 200.7 per troy ounce at 8:34 GMT, shifting in a daily range of $1 205.5-$1 198.8. The precious metal fell 0.29% on Wednesday to $1 200.9.

A report released yesterday showed that US private employers added 212 000 jobs in February, below projections for 220 000. However, the number could be revised higher as was the figure for January, when private-sector jobs were estimated at 213 000 and then lifted to 250 000.

Additionally, the ISM non-manufacturing Purchasing Managers Index edged up in February to 56.9, up from 56.7 and January and 56.2 in December. Analysts had projected a drop to 56.5.

The robust US data, coupled with weaker-than-expected readings from Europe, boosted the dollar while also curbing demand for the precious metal. The US dollar index for settlement in March traded 0.21% higher at 96.190 at 8:25 GMT, shifting in a daily range of 95.945 and 96.305, its highest in more than 11-1/2 years. The US currency gauge gained 0.61% on Wednesday to 95.986.

The strong performance of the US economy could also breathe confidence into Feds decision to initiate its first interest rate hike since 2006, curbing demand for the non-interest-bearing gold.

The European Central Bank is expected to lay out a detailed plan of its more than €1-trillion quantitative easing program, following its meeting later today. The bond-buying program is set to start this month.

On Friday, the US Labor Departments jobs report is expected to show a solid non-farm job creation pace of 240 000 in February, while the unemployment rate likely slid back to a pre-recession low of 5.6%

Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, dropped 2.69 tons to 760.8 on Tuesday and remained unchanged on Wednesday.

“We expect a further test of the $1 195 level, and should we see it break, it would be bearish for gold and open a test of the $1 131-low,” technical analysts at ScotiaMocatta said, cited by Reuters.

Pivot Points

According to Binary Tribune’s daily analysis, April gold’s central pivot point on the Comex stands at $1 202.3. If the contract breaks its first resistance level at $1 207.0, next barrier will be at $1 213.0. In case the second key resistance is broken, the precious metal may attempt to advance to $1 217.7.

If the contract manages to breach the S1 level at $1 196.3, it will next see support at $1 191.6. With this second key support broken, movement to the downside may extend to $1 185.6.