Gold trading outlook: futures steady ahead of key US data, Fed meeting

Gold futures were steady during early trade in Europe today, as investors eye crucial US announcements later this week. The Fed is holding its monthly 2-day meeting, and analysts expect another $10 billion trim to assets purchases.

Gold futures for delivery in August traded at $1 304.6 per troy ounce at 8:43 GMT in New York today. Prices ranged between $1 301.1 and $1 309.4 per troy ounce. The contract dropped about 0.5% last week.

“Gold will likely enjoy a measure of stability at least in the early part of the week on account of the deteriorating situation with Russia and the expected stiffer round of sanctions being contemplated by the Europeans,” Edward Meir, analyst at INTL FCStone, wrote in a note. “However, the slew of U.S. numbers released later in the week should again reinvigorate global equity markets.”

Platinum and palladium opened this week on the upbeat, adding 0.49% and 0.47%, respectively, to trade at $1 485.90 and $883.90 per troy ounce. Silver was little changed at $20.642.

US reports

The US will reveal key figures and decisions this week. Later today, June pending home sales will be posted, with expectations of a 0.5% monthly gain and a 5.2% annual decrease. Also today, Markit will reveal its preliminary July services PMI, and analysts project a reading of 59.8, slightly lower than before, but still a significant growth. A PMI reading of higher than 50 means an expansion of activities, while anything below 50 is translated into contraction for the sector. The bigger the margin from 50, the higher the pace of expansion or contraction.

Wednesday will see preliminary Q1 GDP figures, with expectations of a 3% annual growth after the -2.9% for Q1.

Every positive account for the US boosts sentiment for the economy, raising outlooks and pricing for both the dollar and US companies stocks, pressuring safe-havens such as gold.

The key moment this week will be the announcements following the 2-day meeting of the Federal Open Market Committee (FOMC), which will be revealed on Wednesday. The Fed will decide on benchmark interest rate and monthly assets purchases, with expectations of an unchanged rate at 0.25% and another $10 billion cut to purchases, which will bring the monthly spending to $25 billion. The decisions and Feds following comments are closely monitored by traders, as they are the most influential factor for pricing the dollar.

Later this week, the Conference Board will post its July consumer confidence, which will probably be unchanged at 85.3, ahead of personal income and spending data, due on Friday. More importantly, US unemployment and payrolls for July will be reported on Friday.

Last week saw initial jobless claims scoring an eight-year low, boosting stocks and the dollar ahead of the key reports this week.

Stocks, dollar

US stocks saw mixed results last week. Dow 30 closed the week about 0.8% lower, Nasdaq 100 added 0.6% and S&P 500 was almost unchanged for the week, as trading on Wall Street closed on Friday. Both Nasdaq 100 and S&P 500 scored all-time highs last week.

Meanwhile, the US Dollar Index, which measures the greenback’s performance against six other major currencies, scored sizable gains last week, closing some 0.7% higher, ahead of the crucial FOMC meeting this week. At 8:20 GMT today the gauge was down 0.03% at 81.13.

Holding at the SPDR trust were unchanged at 801.84 tons on Friday, after losing about 4 tons on Thursday and a further 2 tons on Monday.

Ukraine, Gaza

Gold did see some safe-haven demand today, as tensions between the West and Russia over Ukraine were still simmering, analysts expecting a new round of European sanctions. UN human rights chief Navi Pillay said that the downing of MH17 may constitute a war crime, the BBC reported.

The US and EU widened measures against the Kremlin in light of the Malaysian airliner, flight MH17, being shot down over rebel-held territory in eastern Ukraine earlier this month, killing all 298 people on board. Both the US and UK have said that they have evidence it was the pro-Russian separatists, who downed the airliner.

Moscow has not stated otherwise, but has fervently opposed allegations that it has supplied the rebels with the powerful weaponry, thought to have downed the passenger flight. More cues as to the precise fate of the Boeing-777 is expected soon, as the information from the recovered “black boxes” was extracted last week and transferred to investigators.

Elsewhere, Gaza fighting was muted on Monday, with the Israeli ground forces saying the active phase of their operation has ended.

Meanwhile, the UN Security Council called for an “immediate and unconditional humanitarian ceasefire” in Gaza.

More than 1000 Palestinians, mostly civilians, have died since the conflict sparked back to life earlier this month, with Israel first bombing then invading the strip.

Technical view

According to Binary Tribune’s daily analysis, in case gold August futures manage to breach the first resistance level at $1 311.1, the contract will probably continue up to test $1 319.0. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 329.0.

If the contract manages to breach the first key support at $1 293.2, it will probably continue to slide and test $1 283.2. With this second key support broken, the movement to the downside may extend to $1 275.3.