Gold trading outlook: futures steady after gaining significantly on Ukraine yesterday, US data weigh

Gold futures kept steady during early trading in Europe today, after yesterday the precious metal dipped to the lowest price since early February on strong US data, before recovering with developments on the crisis in Ukraine.

Gold futures due in June, the most traded contract on the COMEX division of the New York Mercantile Exchange, traded for $1 293.3 per troy ounce at 8:32 GMT, adding 0.21% for the session so far, with high and low at $1 294.8 and $1 290.4, respectively. Yesterday prices dropped to as little as $1 268.4 per ounce – the lowest since early February, before rallying on Ukraine, to settle for a close of $1 290.6 per ounce, a gain of 0.47% on the previous session.

Gold experienced a turbulent market yesterday, as reports of the deaths of several pro-Russian separatists in eastern Ukraine, alongside threats from the Kremlin, boosted safe-haven demand. The metal was pinned down earlier in the day after the release of upbeat US data which significantly pressured gold futures.

According to the monthly report on durable goods orders for the US, March brought improving demand for lasting products, registering a 2.6% growth from February, while orders for Core durable goods, which exclude transportation items bids, rose by 2.0% on a monthly basis, exceeding the 0.6% forecast. The improving outlooks for the worlds largest economy had received a significant boost last week, when figures on retail sales, consumer inflation and industrial output scored better than expected.

The quarterly Gross Domestic Product report for the US is due next week. Forecasts project a growth of 1.1%, though recent strong data is set to push the figure up. “We still think the U.S. is on the road to economic recovery, which will pressure gold lower in the longer term,” said for Bloomberg Lv Jie, analyst at Cinda Futures Co. Every significant positive outlook of the US economy increases equities demand, which in turn reduces appetite for gold as an alternative investment. The stronger US currency also increases the foreign cost of the dollar-denominated precious metal, further lowering its appeal.

Ukraine supports gold

Ukraine stood its ground as a firm support to safe-haven prices yesterday. The deaths of pro-Russian separatists amid the “anti-terrorist” operation in eastern Ukraine prompted Russian President Vladimir Putin to scold the agenda of the pro-western interim government in Kiev. He threatened of “consequences, should the Ukrainian military again use arms against its people,” while a Russian TV station quoted Vitaly Churkin, Russias ambassador to the UN, as saying that Moscow would have legal basis to send “peacekeepers” to the troubled state.

Meanwhile, the Kremlin urged the US to apply its influence on the Ukrainian government, stopping the crackdown on the eastern separatists, while the US accused Moscow of inciting the unrest. US Secretary of State John Kerry said: “Not a single Russian official has publicly gone on television in Ukraine and called on the separatists to support the Geneva agreement.” He added that US intelligence was certain Russia was “playing an active role in destabilizing eastern Ukraine with personnel, weapons, money and operational planning,” the BBC reported.

Yesterday the UK said that Russian aircraft were detected approaching northern Scotland, and the Netherlands, Denmark and the United Kingdom all sent jets to escort the approaching aircraft away from their airspace.

Elsewhere, Chinese physical demand seems to be recovering, as volumes for spot gold in Shanghai reached the highest figure in 2 months yesterday. “Chinese buyers appear to be coming back to the market after the price fall,” said for Bloomberg Zhu Siquan, an analyst at GF Futures Co. Chinese purchasing was experiencing negative developments recently, as a weaker Yuan and indications of lowering consumer demand pressured contracts for the precious metal.

Assets at the SPDR Gold Trust remain at 792.14 tons, the lowest level in almost three months, maintaining bearish outlooks for the precious metal.

Technical View

According to Binary Tribune’s daily analysis, in case Gold June futures manage to breach the first resistance level at $1 303.2, the contract will probably continue up to test $1 315.8. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 333.2.

If the contract manages to breach the first key support at $1 273.2, it will probably continue to slide and test $1 255.8. With this second key support broken, the movement to the downside may extend to $1 243.2.