Gold trading outlook: futures steady ahead of US data, firm dollar

Gold hovered near the $1 200 mark on Wednesday after two days of losses as the dollar held near the highest in 11 years against a basket or trading partners ahead of key US economic data.

Comex gold for delivery in April was down 0.06% at $1 203.7 per troy ounce at 9:18 GMT, shifting in a daily range of $1 208.4-$1 202.7. The precious metal fell 0.3% on Tuesday to $1 204.4, extending Mondays 0.4% loss.

Gold remained under pressure as US data this week will likely show a robust pace of economic recovery, boosting the chances the Fed will initiate an interest rate hike sooner, rather than later.

Automatic Data Processing Inc. will likely report at 13:15 GMT that US private nonfarm employers added 220 000 jobs in February, which would be the ninth straight month of job growth above 200 000. ADPs report is deemed a precursor to the Labor Departments jobs report which comes out on Friday.

Also due later today is the Institute for Supply Managements February report on services sector activity, expected to show robust growth, while Markit Economics releases its own gauge, coupled with composite data, at 14:45 GMT.

The US dollar traded near the highest level in more than a decade against six major trading peers, led by a weaker euro that tumbled following worse-than-expected business activity data from the Eurozone on Wednesday.

The US dollar index for settlement in March traded 0.31% higher at 95.705 at 9:18 GMT, shifting in a daily range of 95.755-95.365, close to Januarys 11-year peak of 95.850. The US currency gauge slid 0.07% on Tuesday to 95.408.

Investors will be keeping a close eye on the euro ahead of Thursdays interest decision by the ECB and the implementation of the central banks government bond buying program which starts this month.

“In the short term, the mood is still bearish though we might trade in a tight range until the jobs data on Friday,” said a Hong Kong trader for CNBC. “Exchange-traded funds are seeing some big outflows, so that could also add to the pressure if U.S. data is better than expected.”

Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, fell by 7.76 tons to 763.49 tons on Monday, after remaining unchanged for six days, and declined by another 2.69 tons to 760.8 on Tuesday. Mondays drop was the biggest this year.

Pivot points

According to Binary Tribune’s daily analysis, April gold’s central pivot point on the Comex stands at $1 204.5. If the contract breaks its first resistance level at $1 214.3, next barrier will be at $1 224.3. In case the second key resistance is broken, the precious metal may attempt to advance to $1 234.1.

If the contract manages to breach the S1 level at $1 194.5, it will next see support at $1 184.7. With this second key support broken, movement to the downside may extend to $1 174.7.