Gold and silver trading outlook: futures steady after Ukraine election, US economic data ahead

Gold and silver futures price levels were unchanged during early hours in Europe today, with the US and UK in holiday, limiting activity. Ukraine held presidential elections on Sunday, and the winner is almost certain to be confectionery billionaire Petro Poroshenko. The vote was boycotted by the eastern breakaway regions, but Ukrainian and western officials were hopeful it would bring stability and peace. Elsewhere, a number of important economic figures in top-consumer US will be reported this week. Previously, a rally for US stocks and a sharp decline in assets at the SPDR last week signal more bearish times to come for precious metals.

Gold futures for delivery in June traded for $1 291.6 per troy ounce at 8:10 GMT on the COMEX in New York today, down 0.01%. Daily high and low stood at $1 294.8 and $1 290.9 per troy ounce, respectively. Last week the contract was leveled, recording a 0.12% loss, reaching a three-week trough at $1 282.9 per troy ounce on Wednesday.

Meanwhile, silver contracts for July stood at $19.410 per troy ounce, losing 0.04%. Daily high and low were at $19.470 and $19.400 per troy ounce, respectively. Last week the contract gained 0.47%.

Both the ICE and NYMEX are in holiday today, and contracts will be earmarked for settlement tomorrow, when regular sessions begin.

Ukraine election

Ukraine held the presidential vote on Sunday, May 25. With 40.09% of ballots counted, confectionery billionaire Petro Poroshenko receives 54.09%, according to RIA Novosti. The margin would be enough to claim victory in the first round.

In his first speech after voting had ended, he addressed the need for peace and stability. He pledged his efforts would be aimed at not only ending the conflict withing Ukraine, but also normalizing relations with Russia. He is viewed as a strongly pro-Western politician, but argues that peace in the region would be impossible without cooperation with Russia. He added that he will never recognize Russia’s annexation of the Crimea.

“My first decisive step will be aimed at ending the war, ending chaos, and bringing peace to a united and free Ukraine,” Mr Poroshenko said at a press conference in Kiev.

The US and UK expressed their support for the vote and its result, dubbing it an “important step forward” and a “decisive signal.” Moscow has yet to officially comment on the result, though previously Russian President Vladimir Putin said the Kremlin will “respect” the vote.

“The relationship between Russia and the newly elected president in Ukraine will be key for gold prices,” said for Reuters Helen Kau, an analyst at UOB-Kay Hian Securities in Hong Kong.

US economic outlook

Tomorrow will bring a number of important economic reports for the US. Foremost, durable goods orders for April are to be reported. Experts suggest total orders have decreased by 0.5% on a monthly basis after gaining 2.5% in March, while core orders, which exclude the more volatile transportation items, have gained 0.3% after a 2.1% growth in March.

Later on Tuesday, Markit will post its preliminary services PMI for May. Analysts forecast a slightly quicker expansion for the services sector, which accounts for almost 80% of US GDP, with a figure of 55.6, up from 55.0 for April.

Lastly, the Conference Board (CB) will reveal its consumer confidence index for May. It is a leading indicator for consumer spending, which generates about 70% of US GDP. Analysts predict the CB will report an improving consumer sentiment, logging the index at 83.0, up from 82.3 for April.

Wednesday will post data from the EU, before on Thursday the US reveals quarterly GDP growth. Analysts expect a slight contraction after the brutal winter halted economic activities for a prolonged period. Also on Thursday, pending home sales for April in the US will be reported, with forecasts of small gains.

On Friday, a report on personal income and spending for April in the world’s top economy will be released. Economists project a minor monthly increase in both.

When outlooks for the economy improve, they draw investments away from havens and towards equities, and there is often a strict opposite correlation between stocks and precious metals.

US stocks rallied on largely positive economic data last week. S&P 500, which is a broader measurement for US stocks, added 0.42% on Friday to settle at 1900.53, for a total of 1.20% increase for the week. The index is just 0.09% short of the all-time high. Dow 30 Industrial gained 0.38% to close at 16606.27 and is 0.77% below the record peak. The tally for the week for Dow 30 is a growth of 0.70%. Meanwhile, Nasdaq 100, which excludes financial institutions, rose by 0.73% to stand at 3677.33, bringing the week’s gain to 2.50%, and is 1.63% away from the highest level on record.

Assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, remained at 776.89 tons, the lowest level since December 2008, as the trading week closed on Friday. The fund has lost over 30 tons in the last month, as investor interest in havens dwindles, pressured by the growing US economy.

Technical view

According to Binary Tribune’s daily analysis, in case Gold June futures on the COMEX manage to breach the first resistance level at $1 296.1, the contract will probably continue up to test $1 300.4. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 305.2.

If the contract manages to breach the first key support at $1 287.0, it will probably continue to slide and test $1 282.2. With this second key support broken, the movement to the downside may extend to $1 277.9.

Meanwhile, silver futures for July will see their first resistance level at $19.530. If it is breached, the contract will meet next resistance at $19.643, and then the third level at $19.760.

Silver will find its first support point at $19.300. Should it be breached, the second level of support is estimated at $19.183 and the third at $19.070.