Gold trading outlook: futures lower ahead of key economic data, Iraq support wanes

Gold futures were lower during early trade in Europe today. The precious metal logged an insignificant gain last week, amid mixed US data and fleeting concerns on Iraq. The worlds top economies will post more reports this week.

Gold futures for delivery in August traded for $1 315.4 per troy ounce at 7:53 GMT on the COMEX in New York today, down 0.35%. Daily high and low stood at $1 318.4 and $1 314.1 per troy ounce, respectively. The contract added about 0.2% last week, reaching a two-month high of $1 326.6 per troy ounce on Tuesday.

Meanwhile, silver contracts for July stood at $20.860 per troy ounce, for a drop of 1.03%. Daily high and low were at $20.980 and $20.845 per troy ounce, respectively. The contract gained some 0.6% last week, reaching a three-month high of $21.205 per troy ounce on Friday.

“Last week’s move in the gold price back above $1,300 an ounce looks based on the market’s reassessment of U.S. inflation risks higher, but we note that inflation expectations remain well-anchored,” Australia & New Zealand Banking Group Ltd. analysts including Victor Thianpiriya wrote in a note cited by Bloomberg. “Physical market support remains lacking.”

US economy

The US will post several key readings next week. Pending home sales for May will be revealed later today, and analysts expect a 0.8% monthly gain, after 0.4% were logged in April. The real estate industry accounts for about 13% of US GDP.

ISM’s final reading on manufacturing PMI for June will be released on Tuesday, with forecasts of accelerating growth for the factory sector of the US, before a separate report on May factory orders on Wednesday, which are also projected to have grown. ISM will post its non-manufacturing PMI for June on Thursday, and experts suggest accelerating growth in the services sector as well.

Thursday will feature the key report on employment for June. The unemployment rate is set for an unchanged 6.3%, while nonfarm payrolls have probably added 210 000 – 213 000, after a 217 000 figure for May. Payrolls are a leading indicator for the overall health of the economy.

Previously, the US posted some worse-than-expected data last week. Q1 GDP growth was far below the expected contraction of 1.8% at -2.9%, which is also the worst quarterly growth since Q1 of 2009. Durable goods orders for May also scored below par, though the negative sentiment was largely already priced. Also, Markit posted its preliminary reading on US services PMI for June, for a standing well above expectations at 61.2. A reading of 50 or higher means expansion, and vice versa. The greater the distance from 50, the more sizable an expansion or contraction.

The services sector accounts for about 80% of US GDP.

Eurozone

The Eurozone will post a key preliminary reading on June CPI later today. Consumer inflation will probably be revealed at 0.5% on an annual basis. Core CPI is expected to stand at 0.7% year-on-year.

Manufacturing PMI for June and unemployment rate for May will be posted on Tuesday, with expectations of little change in both. Thursday will see services PMI for June and retail sales for May, as well as a key European Central Bank (ECB) decision on the benchmark lending rate and deposit rates. The ECB cut both rates last time, for a 0.15% central lending rate and -0.10% deposit rate, which taxes commercial banks if they keep their money out of circulation.

Stocks

US stocks reflected the mixed results posted this week. S&P 500 added about 0.1% this week, Dow 30 logged about 0.4% weekly loss, while Nasdaq 100 added about 1% this week for an all-time-high close of 3844.44 on Friday. Dow Jones Euro Stoxx 50 closed the week about 2.5% lower.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, were unchanged on Friday at 785.02 tons, after adding some 3 tons earlier. The fund lost more than 4 tons last week, and is orbiting multi-year lows amid a recovering US economy.

The US Dollar Index, which measures the greenback’s performance against six other major currencies, was pressured by the mixed economic data last week, dropping about 0.5% for a standing at 80.09 as Friday’s session closed. By 7:46 GMT today the gauge was down a further 0.04%.

Meanwhile, the euro, the dollar’s main competitor, gained more than 0.4% against the dollar last week, closing at 1.3650 EUR/USD. By 7:47 GMT today the pair stood for a 0.08% gain at 1.3654 EUR/USD.

Technical view

According to Binary Tribune’s daily analysis, in case Gold August futures on the COMEX manage to breach the first resistance level at $1 324.3, the contract will probably continue up to test $1 328.7. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 334.2.

If the contract manages to breach the first key support at $1 314.4, it will probably continue to slide and test $1 308.9. With this second key support broken, the movement to the downside may extend to $1 304.5.

Meanwhile, silver futures for July will see their first resistance level at $21.221. If it is breached, the contract will meet next resistance at $21.366, and then the third level at $21.526.

Silver will find its first support point at $20.916. Should it be breached, the second level of support is estimated at $20.756 and the third at $20.611.