Gold and silver trading outlook: futures steady ahead of Fed minutes; SPDR assets drop

Precious metals were steady during early trading in Europe today, ahead of Feds minutes release. Assets at the SPDR dropped to a five-year low on Tuesday. Elsewhere, Ukraine saw further confrontations on Tuesday, when the country’s richest man urged for peace and unity ahead of the presidential election on May 25.

Gold futures for delivery in June traded for $1 294.3 per troy ounce at 8:29 GMT on the COMEX in New York today, dropping 0.02%. Daily high and low stood at $1 296.3 and $1 292.2 per troy ounce, respectively. Yesterday the yellow metal added 0.06% and so far this week the contract has gained 0.09%.

Meanwhile, silver contracts for July stood at $19.455 per troy ounce, gaining 0.29%. Daily high and low were at $19.500 and $19.365 per troy ounce, respectively. Yesterday silver rose by 0.24% and so far this week the contract has added 0.37%.

Later today the Federal Reserve will release minutes of its last meeting. The record is closely followed by investors, since it indicates the Feds sentiment, and as such are a primary source of dollar speculation.

The US dollar index, which measures the greenback against six other major currencies, recorded a 0.14% drop today, to stand at 79.99 at 7:43 GMT. Yesterday US stocks recorded drops, with all three major indices losing between 0.40% and 0.80%, though all remain within 2-3% of record highs. Last week saw both S&P 500 and Dow 30 score all-time highs.

Assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, dropped to 780.19 tons, registering the lowest level since December 2008. The fund has lost 26 tons in the last month, as investor interest in havens dwindles, pressured by the recovering global economy.

“Gold remains stuck in a range as investors look ahead to minutes from the Fed,” said for Bloomberg Mark To, head of research at Wing Fung Financial Group.

Tomorrow the weekly report on jobless claims will be released. Forecasts suggest initial claims have grown from last weeks seven-year low.

Also tomorrow, existing homes sales are projected to have increased, adding on positive sentiment for the US housing market, after on Friday building permits recorded a six-year high and housing starts were at a six-month peak. Friday will feature news on new homes sales, with expectations of growth there as well.

Yesterday the World Gold Council reported that China, the world’s top consumer of gold, has seen an 18% quarterly drop in gold demand for the first three months of 2014. The decline was 55.4% on a yearly basis. Meanwhile, India, the second-top consumer of the precious metal, saw its demand fall 26%, while imports plunged by 52% for the same period, after restrictions imposed by the recently-replaced government.

Ukraine

Hundreds of people attended staged rallies in Donetsk yesterday, after Ukraine’s richest man, Rinat Akhmetov, whose wealth is estimated at more than $11 billion, urged for a mass protest for peace. His Donbass Arena stadium hosted a crowd of several hundred chanting the Ukrainian hymn and waving the blue and yellow, in a peaceful unity demonstration.

The pro-Russian separatists threatened to nationalize Mr Akhmetov’s assets. His enterprises are based in the Donetsk region, and the leader of the “Donetsk People’s Republic”, one of the breakaway provinces, Denis Pushilin expressed disappointment in Mr Akhmetov’s “choice of allegiance.”

“Akhmetov has made his choice. Unfortunately, he chose against the people of Donbass. Paying taxes to Kiev means financing terrorism in Donbass,” Mr Pushilin was quoted as saying, the BBC reported.

Yesterday, Ukrainian officials asked Moscow to put off air-force military drills planned for Wednesday through Sunday in districts bordering Ukraine. The exercises will possibly fuel the confrontation between pro-Russian separatists and authorities as the government prepares to hold a presidential election on Sunday, May 25.

Technical view

According to Binary Tribune’s daily analysis, in case Gold June futures on the COMEX manage to breach the first resistance level at $1 299.2, the contract will probably continue up to test $1 303.8. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 310.4.

If the contract manages to breach the first key support at $1 288.0, it will probably continue to slide and test $1 281.4. With this second key support broken, the movement to the downside may extend to $1 276.8.

Meanwhile, silver futures for July will see their first resistance level at $19.501. If it is breached, the contract will meet next resistance at $19.603, and then the third level at $19.741.

Silver will find its first support point at $19.261. Should it be breached, the second level of support is estimated at $19.123 and the third at $18.021.