By FXEmpire.com
Gold futures are strongly respecting the intraday support of $1567 below which strong buying is being observed to protect it from a further fall. Nevertheless, the current week has events in store which may force gold to break the above the 1567 level. This morning gold is again seen slipping slightly from its close while the euro might have stopped its decline at the technical support at $1.2100. Overall gold remains congested in the 1565-1575 range and is directionless at present.
Asian equities are mixed again following US markets and Chinese PMI data.
Moving forward, the euro is expected to pare initial gains after Germany, the safest among the peripheral Euro nations, was placed on negative outlook from Moody’s. Additionally, Spain will be auctioning bills today followed by Italy on July 26. Traders are expecting a significant jump in bond yield will be exhausting to the euro during the day.
The “Troika” will be holding a meeting to discuss obligations and commitments to future funding for Greece’s bailout, anticipation of which is mostly pessimistic as the country failed to implement the agreed austerities till now.
From the economic data front, the European PMI numbers are expected to show slight improvement after battered hard, on anticipation of which market may see a slight pullback after the Chinese manufacturing in this morning has also helped moderate the losses. Chinese PMI printed above forecast but still below the basic 50 required to show growth.
A clear trend is still hard to find as technically gold has given moved within its short term trend line support at $1560 for three weeks. Nevertheless, the factors discussed above are mostly showing a possible downtrend till $1567 and then $1560 from where a pullback can be expected.
However, the global scenario may force it to follow the international trends and react to news flow.
Silver futures prices have also taken a back seat as the wobbling Asian equities would have created pressure on the metal. The euro although has given a slight pull back, we expect the gain to be short lived and should reverse itself when we see results from the Spanish auction.
We therefore expect euro and silver may come down during the European hours. However, bottomed out Euro zone PMI numbers may show a slight uptick which may provide little pull back in prices but the overall trend seems to be bearish. From the technical part major support is still holding at $26.50 and factors discussed above may end up with a range bound move for the metal. Precious metals may surge but there is little reason to see industrial metal trade up. We may therefore see gold and silver diverge in trading later today.
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Originally posted here
