Gold trading outlook: futures higher as SPDR gains again, US stocks down

Gold futures were higher during early trade in Europe today. US stocks dropped from all-time highs on Monday, while SPDR assets logged another increase. Traders await minutes from the FOMC June meeting.

Gold futures for delivery in August traded for $1 320.1 per troy ounce at 8:23 GMT on the COMEX in New York today, up 0.46%. Daily high and low stood at $1 321.3 and $1 317.6 per troy ounce, respectively. The contract lost 0.27% yesterday, after it added about 0.2% last week, reaching a three-month high of $1 334.9 per troy ounce.

Meanwhile, silver contracts for September stood at $21.085 per troy ounce, for a gain of 0.34%. Daily high and low were at $21.110 and $21.020 per troy ounce, respectively. The silver contract dropped 0.28% on Monday, after it added about 0.2% last week, also reaching a three-month high of $21.335 per troy ounce.

“Market expectations for an early rate hike is pressuring the gold price,” Sarah Xie, a Hong Kong-based analyst at Wing Fung Financial Group Ltd., wrote in a note, cited by Bloomberg. “Gold is expected to remain flat until investors get more guidance from the Fed regarding the timing of rate increases.”

Minutes from the Federal Open Market Committee (FOMC) June meeting will be released this Wednesday. The log is closely monitored by traders, since it reveals the plans and direction of the US most-senior monetary policy body.

The meeting, which took place some three weeks ago, resulted in decisions to keep the benchmark lending rate unchanged at 0.25%, while reducing assets purchases through its monetary stimulus program by another $10 billion to $35 billion a month, expressing limited confidence in the US economic recovery.

Stocks, dollar

US stocks backed off from the record highs logged last week, with all major indices closing for sizable losses. S&P 500 dropped 0.39% as Wall Street trading closed on Monday, Dow 30 declined by 0.26%, while Nasdaq 100 was down 0.31%.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, added about 2 tons on Monday to stand at 798.19 tons, after gaining more than 14 tons over the last two weeks. Assets were recently pressured to multi-year lows by a recovering US economy.

The US Dollar Index, which measures the greenback’s performance against six other major currencies, dropped 0.10% on Monday, and by 8:19 GMT today was up 0.06% at 80.31.

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 $1 321.8, the contract will probably continue up to test $1 326.5. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 331.4.

If the contract manages to breach the first key support at $1 312.2, it will probably continue to slide and test $1 307.3. With this second key support broken, the movement to the downside may extend to $1 302.6.

Meanwhile, silver futures for September will see their first resistance level at $21.198. If it is breached, the contract will meet next resistance at $21.381, and then the third level at $21.548.

Silver will find its first support point at $20.848. Should it be breached, the second level of support is estimated at $20.681 and the third at $20.500.