Gold trading outlook: futures continue downward ahead of Fed Chair conference, employment, manufacturing PMI

Gold extended its slide during early European trading, after a turbulent session yesterday, which closed on-par with the previous. Later today Federal Reserve Chairwoman Janet Yellen will speak. Data on employment and manufacturing activity for the US is also expected.

Gold futures for delivery in June traded for $1 283.1 per troy ounce at 8:40 GMT on the COMEX in New York today, losing 0.99% from last session’s closing price. Daily high and low stood at $1 293.0 and $1 281.1 per troy ounce, respectively. Yesterday the precious metal recorded insignificant losses of 0.03% on mixed signals from the US, though it also registered a fourth consecutive day of drops.

Employment data from the US yesterday revealed a higher than projected rise in the number of non-farm payrolls for the month of April. The ADP Research Institute reported 220 000 more payrolls, exceeding expectations ahead of official data on Friday.

At the same time, preliminary data by the Bureau of Economic Analysis showed GDP growth for the first three months of 2014 stood at 0.1% on a quarterly basis. The growth is the lowest in a year and is attributed to a rough winter bearing down on economic activities.

Also on Wednesday, the Federal Open Market Committee announced further cut-backs for the Feds assets purchasing program. The expected trimmings show a growing confidence in the recovery of the US economy. Every positive report for the US pressures gold, as investments are attracted to the higher risk-rewards of other assets, such as equities. Meanwhile, a stronger dollar lifts the cost of the precious metal for foreign currencies.

Later today Federal Reserve Chairwoman Janet Yellen will speak. Investors keenly follow the speech, looking for subtle cues about the Feds plans on monetary policy, which has a major influence on the dollar.

Today will also see reports on jobless claims and manufacturing PMI for the US. Forecasts put initial jobless claims for the week through April 26th at 319 000, down from last weeks 329 000, while continuing claims are set to have risen to 2.708 million, adding on last weeks 2.680 million. Manufacturing PMI are expected to show an increase in factory activity in the US for the month of April, with Markits figure projected at 55.8, gaining on Marchs 55.4, while ISMs reading is forecast to stand at 54.3, up from 53.7 for last month.

The crisis Ukraine continues to offer some fleeting safe-have demand for gold, with fresh sanctions against Russia and spreading unrest.

Acting Ukrainian President Olexander Turchinov said yesterday, that military forces were on full combat alert, as Russian troops are still amassed near the border. He also admitted the authorities were unable to quell the turmoil in the eastern regions, and that Kiev is now aiming to contain the discontent. “Our task is to stop the spread of the terrorist threat first of all in the Kharkiv and Odessa regions,” he said.

Elsewhere, assets in the SPDR Gold Trust – the largest exchange-traded fund, fell to 787.94 tons on Wednesday, recording the lowest level since January 2009. The outflow came after 6 days of near-bottom levels and solidified bearish outlooks for the precious metal, as the US economy strengthens.

Technical view

According to Binary Tribune’s daily analysis, should gold for June breach the first resistance level at $1 301.2, the contract will most likely continue up to probe $1 306.6. In case the second key resistance is broken, the precious metal will probably attempt to advance to $1 314.7.

If the contract manages to breach the first key support at $1 287.7, it will probably continue to slide and test $1 279.6. Should this second key support be broken, the downward movement may continue to $1 274.2.