Gold trading outlook: futures steady ahead of Fed meeting, Ukraine, Gaza support

Gold futures were steady during early hours in Europe today, as investors expected muted trade ahead of the FOMC meeting conclusion on Wednesday. The precious metal saw some safe-haven demand, as the conflicts in Gaza and Ukraine showed no sign of easing.

Gold futures for delivery in August traded at $1 305.3 per troy ounce at 7:11 GMT in New York today, up 0.15%. Prices ranged from $1 303.2 to $1 306.5 per troy ounce. The contract was unchanged yesterday after losing 0.5% last week.

“Geo-political tension tested investors’ risk appetite in the first half of the year and continues to do so,” Bradley George, head of commodities and resources at Investec Asset Management Ltd., said in a report.

Spot silver was down 0.09% at $20.608 per troy ounce, platinum dropped 0.12% to trade at $1 489.40 and palladium was up 0.02% at $880.90.

Ukraine

Ukrainian security sources said on Monday that the Malaysian airliner, which crashed over rebel-held territory in eastern Ukraine this month, killing all 298 on board, was shot down by a missile, citing data from the “black boxes”. Dutch officials, who possess the data after a UK-based analysis, did not confirm.

The US and UK said earlier that it was a Russian-made Buk missile, which shot down the airliner, adding that it was probably shot by mistake by the rebels.

The Kremlin has not stated otherwise, but has denied all allegations that it supplies the pro-Russian separatists with weaponry, including Buk missiles.

Meanwhile, US President Barack Obama said on Monday that Russia had broken the Intermediate-Range Nuclear Forces Treaty signed in 1987, which prohibits the use of 500-5500 kilometer-range missiles.

“We encourage Russia to return to compliance with its obligations under the treaty and to eliminate any prohibited items in a verifiable matter,” a senior official said, adding that President Obama has written to President Putin on the matter.

This is the first time the US have publicly spoken out against Moscow on the matter, after the Kremlin was said to have begun tests in 2008, the BBC reported.

The allegations come as the confrontation between Russia and the West intensified over the civil strife in Ukraine. The US announced that after talks, EU leaders have agreed on more and stronger sanctions against Russia. Analysts believe a new round of measures will be coming through in the immediate future, this time targeting the Russian defense and energy sectors, a major part of Russias economy.

Gaza

Gaza saw more bitter fighting on Monday, as Israeli ground forces continue the operation in the Strip. Israeli PM Benjamin Netanyahu warned of prolonged warfare, but reaffirmed of Israels commitment.

“We will continue to act aggressively and responsibly until the mission is completed to protect our citizens, soldiers and children,” Netanyahu said.

Meanwhile, the UN Security Council called for an “immediate and unconditional humanitarian ceasefire” in Gaza. UN Secretary General Ban Ki-moon said Gaza is in a critical condition, adding that people had nowhere to run from the fighting.

Violence there must stop “in the name of humanity,” he said.

More than 1100 Palestinians, most of them civilians, and 50 Israelis have died since the conflict sparked back to life last month, after the abductions and killings of three Israeli and one Palestinian teenagers.

US reports

On the economic side of things, gold is facing a possible retreat as the US will post a plethora of economic data this week, with expectations of significant gains throughout.

Advanced GDP figures for Q2 will be reported tomorrow, and experts suggest a reading of 3.0%, after the -2.9% for Q1. Later on, unemployment rate and nonfarm payrolls for July will be posted on Friday, with projections of steady readings after last weeks eight-year low for initial jobless claims.

The US will also post personal spending and income and manufacturing PMI this week, while the EU will reveal CPI and unemployment.

The key moment this week is the Federal Open Market Committee (FOMC) two-day meeting, which starts today. The Fed will probably decide to keep the benchmark interest rate unchanged at 0.25%, while trimming monthly assets purchases by another $10 billion to $25 billion, analysts say. FOMC decisions are the most influential factor on dollar pricing, and as such are followed with utmost attention by traders.

Stocks, dollar

US stocks were little changed as Monday trading closed on Wall Street. S&P stood 0.03% up, Dow 30 added 0.13%, while Nasdaq 100 gained 0.05%.

Meanwhile, the US Dollar Index fell by 0.01% on Monday, and by 7:02 GMT today was up 0.05% at 81.16.

Holding at the SPDR gold trust were unchanged on Monday at 801.84 tons, after losing about 6 tons last week.

Technical view

According to Binary Tribune’s daily analysis, in case gold August futures manage to breach the first resistance level at $1 308.1, the contract will probably continue up to test $1 312.9. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 316.4.

If the contract manages to breach the first key support at $1 299.8, it will probably continue to slide and test $1 296.3. With this second key support broken, the movement to the downside may extend to $1 291.5.