Gold trading outlook: futures hold steady after Greek decision

Gold edged up on Wednesday following two days of declines after Greece decided not to ask creditors for a debt write-down, relieving some of the pressure on equities and thus denting safe-heaven demand.

Comex gold for delivery in April was up 0.36% at $1 264.9 per troy ounce at 08:34 GMT, shifting in a daily range of $1 267.9-$1 256.9. The precious metal fell 1.30% to $1 260.3 on Tuesday.

The government of Greece abandoned its campaign promise to reduce the countrys financial obligations by asking fellow European countries to write down its debt.

Instead, Greece proposed to swap its old debt with new bonds that would be repaid as the countrys economy expands. The move calmed investors over concerns that Greece will be the first country to leave the 19-member zone, while also boosting interest in riskier assets.

The request also lifted shares of Greek banks, which experienced a sharp drop in value following the anti-austerity Syriza partys election win. Asian stock also gained.

Additionally, oil prices rebounded and scored a 19% increase during the four days to Tuesday and even though crude fell on Wednesday, it also helped dent safe-heaven demand for the precious metal.

“Appetite for risk now appears higher and that is spurring some rotation of funds away from the safe havens in the yen and gold to riskier assets such as equities and the euro,” Phillip Futures investment analyst Howie Lee said in a note, cited by CNBC. “Barring any downside black swan events, it is now increasingly unlikely that we could see gold racing for $1,300 again in the near future,” Mr. Lee projected.

Since reaching a five-month high late last month, gold has been slowly falling and has pared its year-to-date advance to 7%.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, fell 1.79 tons on Tuesday to 764.94 tons, drifting away from their highest since October of 766.73 tons. Changes in holdings typically move gold prices in the same direction.

Meanwhile, investors will be waiting for the Labor Department’s jobs report release on Friday. According to analysts polled by Reuters the data will show that US employers added 230 000 new jobs in January, which is below the figure from December but still overall strong. Unemployment rate is expected to have remained at a multi-year low of 5.6%.

A robust report may weigh in favor of a sooner US interest rate increase by the Federal Reserve, but speculations around a possible delay are mounting up as low oil prices have kept inflation in the country below the Feds targeted level of 2%.

The US dollar index for settlement in March was up 0.31% at 94.010 at 08:33 GMT, holding in a daily range of 94.025-93.770. The US currency gauge fell 1.07% on Tuesday to 93.724. A stronger greenback makes dollar-denominated commodities more expensive for holders of foreign currencies and curbs their appeal as an alternative investment, and vice versa.

Pivot Points

According to Binary Tribune’s daily analysis, April gold’s central pivot point on the Comex stands at $1 267.5. If the contract breaks its first resistance level at $1 279.3, next barrier will be at $1 298.2. In case the second key resistance is broken, the precious metal may attempt to advance to $1 310.0.

If the contract manages to breach the S1 level at $1 248.6, it will next see support at $1 236.8. With this second key support broken, movement to the downside may extend to $1 217.9.