Gold trading outlook: futures climb as rate hike still not in sight, dollar lower

Gold futures continued adding during early trade in Europe today. The Fed released minutes from its June meeting yesterday, pressuring the dollar and supporting the precious metal, while stocks also logged sizable gains.

Gold futures for delivery in August traded for $1 330.1 per troy ounce at 7:15 GMT on the COMEX in New York today, up 0.44%. Daily high and low stood at $1 332.4 and $1 325.0 per troy ounce, respectively. The contract added 0.59% yesterday, after dropping some 0.3% earlier this week.

Meanwhile, silver contracts for September stood at $21.220 per troy ounce, for a gain of 0.72%. Daily high and low were at $21.290, which was also a four-month peak, and $21.120 per troy ounce, respectively. The silver contract added 0.26% on Wednesday, after losing about 0.6% earlier this week.

“Gold has been given a lift by the Fed minutes as the dollar comes under pressure,” Huang Wei, Shanghai-based analyst at Huatai Great Wall Futures Co., said for Bloomberg.

The log from the June 16 – June 18 meeting of the Federal Open Market Committee (FOMC) was released by the Fed yesterday. It revealed that an interest rate hike was still not on the table, confirming the Feds limited confidence in the US economic recovery, pressuring the dollar. Meanwhile, the account from the meeting also pointed the expected expiry of the Federal Reserves assets-purchasing stimulus program at October this year.

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 reversed the losing trend on Wednesday, with all major indices closing for sizable gains. S&P 500 added 0.46% as Wall Street trading closed, Dow 30 grew by 0.47%, while Nasdaq 100 was up 0.75%.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, was unchanged on Wednesday after adding about 2 tons on Tuesday to stand at 800.28 tons. The fund has gained more than 16 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 0.22% on Tuesday, pressured by Fed rate outlooks. The gauge has lost 0.38% so far this week, and by 6:58 GMT today it was up 0.05% at 80.11.

The US will post jobless claims figures later today. Initial applications for unemployment benefits for the week ended July 5 are expected to stand at an unchanged 315 000, while continuing claims for the week through June 28 are projected to have slightly dropped to 2.567 million.

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 $1 332.2, the contract will probably continue up to test $1 340.2. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 346.9.

If the contract manages to breach the first key support at $1 317.5, it will probably continue to slide and test $1 310.8. With this second key support broken, the movement to the downside may extend to $1 302.8.

Meanwhile, silver futures for September will see their first resistance level at $21.222. If it is breached, the contract will meet next resistance at $21.376, and then the third level at $21.467.

Silver will find its first support point at $20.977. Should it be breached, the second level of support is estimated at $20.886 and the third at $20.732.