Gold trading outlook: futures edge higher despite rising dollar

Gold futures were slightly higher during early trade in Europe today, as investors sought safety amid growing tensions in Ukraine, after 10 Russian paratroopers were captured by Kiev. Positive US data boosted the dollar to a new peak yesterday, though failed to push gold lower.

Gold futures for December delivery on the Comex in New York traded at $1 286.7 per troy ounce, up 0.12%, at 8:00 GMT. Prices ranged from $1 280.9 to $1 287.4 per troy ounce. The precious metal added 0.5% on Tuesday.

“The market is still very cautious,” Brian Lan, managing director of retailer GoldSilver Central Pte Ltd in Singapore, said for Reuters. “What we are seeing is a lot of speculative trading by the bigger players and hedge funds. Gold is still within the trading band.”

Silver for September delivery stood for a 0.16% daily gain at $19.490 per troy ounce, while palladium was down 0.04% at $889.80. October platinum was up 0.37% at $1 424.80.

Two key readings on the US economy were posted yesterday, as investors seek to reinforce outlooks of an earlier than previous expected rate hike. The Conference Board’s consumer confidence index was logged at 92.4, the highest reading in almost seven years.

Earlier, durable goods orders were logged for a mixed read. Overall, orders added 22.6%, the biggest monthly increase on record, as the figure was boosted by a surge in orders for commercial airplanes for Boeing last month. Core orders, which exclude volatile items such as airplanes, were logged down 0.8% on a monthly basis, paring much of the positive vibes from the overall figure.

The data was seen as positive enough to strengthen speculation that the Fed will be raising the benchmark interest rate earlier, boosting the US dollar to a new 13-month high and pressuring the precious metal lower.

Since gold, like most other exchange-traded commodities, is denominated in dollars, a higher value for the greenback increases the cost of the metal to other currencies, reducing its appeal.

“Gold found some support [from safe haven bids on Ukraine] despite the positive U.S. economic data, and strong dollar” Australia & New Zealand Banking Group Ltd. analysts wrote in a note today, cited by Bloomberg.

Ukraine

Ukrainian President Petro Poroshenko met with his Russian counterpart in Minsk, Belarus, as the push towards a ceasefire met support from both sides, and from the West.

The meeting took place the day after 10 Russian military servicemen were captured in Ukraine. Moscow said the group had entered Ukraine “by accident”, but the soldiers themselves said Russia should stop sending troops in Ukraine.

Earlier, Kiev reported its army had won a skirmish with several dozen armored vehicles, which entered Ukraine from Russia, and were said to be manned by the Russian military disguised as Donbas rebels.

Elsewhere, conflicts in Libya, Iraq and Syria were still closely monitored, while Israel and Gaza officials were said to have agreed a long-term peace deal yesterday, somewhat calming fears for the world’s most violent region.

Assets at the SPDR Gold Trust, the largest exchange-traded gold fund, dropped ~1.5 tons on Tuesday, adding to the 3 tons lost on Monday and reaching the lowest level since late June. Decreasing volumes at the SPDR signal lower investor interest in the metal.

Technical support and resistance levels

According to Binary Tribune’s daily analysis, December gold’s central pivot point on the COMEX stands at $1 284.3. In case futures manage to breach the first resistance level at $1 292.8, the contract will probably continue up to test $1 300.5. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 309.0.

If the contract manages to breach the first key support at $1 276.6, it will probably continue to slide and test $1 268.1. With this second key support broken, the movement to the downside may extend to $1 260.4.