Gold trading outlook: futures steady ahead of Fed decisions, economic data

Gold futures were steady during morning trade in Europe today, as investors eye key US economic reports and the conclusion of the Feds meeting. The conflicts in Ukraine and Gaza continued to offer background support for the safe haven metal.

Gold futures for August settlement stood unchanged for the day at $1 298.3 per troy ounce at 7:14 GMT in New York today. Prices ranged from $1 297.7 to $1 299.8 per troy ounce. The contract dropped 0.38% on Tuesday, after closing unchanged on Monday.

“Prices look a little vulnerable near term,” HSBC analysts said in a note. “With trading volume light more recently, the market is likely to be more data driven than usual.”

September silver added 0.21% to trade at $20.627 per troy ounce, palladium was up 0.44% at $882.20, while platinum for October was down 0.03% at $1 484.10.

FOMC meeting

The Fed will conclude its 2-day meeting today, with decisions on the benchmark interest rate and the volume of monthly government assets purchases, which were introduced in late 2012 to pump fresh money into the then-slacking US economy.

“Nobody wants to be long gold right now when you have a Fed that most people believe is inclined to tighten sooner rather than later,” Frank Lesh, a broker at FuturePath Trading, said for the Wall Street Journal.

Analysts suggest the rate will be unchanged at 0.25%. An interest rate hike is expected in early 2015, and investors await an indication of the time frame in the speech after the meeting concludes. Meanwhile, purchases will probably be trimmed by another $10 billion to $25 billion per month, which extrapolates to a close for the program in late 2014.

The program closing would support the dollar, as less money will be present in the economy, while a rate hike in the nearer future would also boost the dollar, pressuring gold.

US reports

A number of key US economic reports will also be posted today, with expectations of robust figures throughout, which would pressure safe-havens as the dollar and stocks would be supported.

ADP will post its advanced reading on US nonfarm payrolls for the month of July, ahead of the official report on Friday. Analysts project that the US economy has added 230 000 new jobs in July, after reaching a three-year peak in June, when 262 000 new nonfarm payrolls were added. ADP had suggested a figure of 281 000 for last month.

Also today, GDP preliminary figures for Q2 will be reported by the Bureau of Economic Analysis, with expectations of a 3.0% growth on an annual basis after the -2.9% figure for Q1.

Stocks, dollar

US stocks saw moderate losses on Tuesday, with all three major indices closing for sizable drops. S&P 500 was down 0.45% as trading on Wall Street closed, Dow 30 lost 0.42%, while Nasdaq 100 dropped 0.21%.

Meanwhile, the US Dollar Index, which measures the greenbacks performance against six other currencies, added 0.23% on Tuesday, and by 6:45 GT today was up 0.02% at 81.32.

Assets at the SPDR Gold Trust remained unchanged at 801.84 tons on Tuesday, after losing some 6 tons last week.

Ukraine, Gaza

The US and EU intensified sanctions against Moscow on Tuesday, with the US banning trade with three Russian banks, while the detailed list of EUs measures is expected later today, and will include defense, energy, finance and high-tech trade curbs, as well as more asset freezes and travel bans to individuals.

“Because we’re closely coordinating our actions with Europe, the sanctions we’re announcing today will have an even bigger bite,” Obama told reporters yesterday at the White House. “Russia’s energy, financial and defense sectors are feeling the pain.”

The latest round of sanctions comes in light of the downing on Malaysian passenger jet, flight MH17, which was shot down over rebel-held territory in eastern Ukraine. The West has accused the rebels for the act, and Moscow for supplying the insurgents with the weaponry.

The Kremlin has denied any involvement and has instead put the blame for the incident on the Ukrainian military.

Elsewhere, Gaza saw more bitter fighting on Tuesday and early on Wednesday, as the Israeli military continued shelling and destroying suspected Hamas-held buildings. The UN reported more casualties at one of their shelters, with a number of its staff killed by the Israeli fire as well.

The death toll has passed 1 200 Palestinians, most of them civilians, and 55 Israeli soldiers since tensions conflagrated earlier this month. The Palestinian health ministry also reported more than 6 700 people were injured.

Technical view

According to Binary Tribune’s daily analysis, in case gold August futures manage to breach the first resistance level at $1 308.4, the contract will probably continue up to test $1 318.6. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 325.0.

If the contract manages to breach the first key support at $1 291.8, it will probably continue to slide and test $1 285.4. With this second key support broken, the movement to the downside may extend to $1 275.2.