Friday, July 25, 2014 2:17 PM

(Kitco News ) - Gold traders will be scrutinizing both geopolitical headlines and a slew of U.S. economic news next week to gauge the direction for prices.

A full U.S. economic slate during the last three days of the week will include a post-meeting statement from the Federal Open Market Committee and the always-important report on nonfarm payrolls. In addition, market participants will be watching to see whether tensions abate or worsen in the key hotspots of Ukraine and the Gaza.

As of the Comex pit settlement on Friday, gold for August delivery lost $6.10 an ounce for the week to settle at $1,303.30. September silver fell 25 cents during the week to $20.636 an ounce. Both got a bounce on Friday after gold hit its lowest level in more than a month on Thursday.

Participants in the weekly Kitco News Gold Survey look for prices to weaken again next week. Out of 22 respondents, 14 see prices down, while four see prices up and four expect prices to be sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Next week is quite significant because there is a lot of U.S.-centric data and news flow, and we have the FOMC meeting, said Robin Bhar, metals analyst with Societe Generale. So the market will be scrutinizing comments and the accompanying statement to see if there are any clues as to when the Fed will start to raise rates. And at the end of the week, weve got the nonfarm payrolls. Last months was very strong, and I suppose the betting would be an equally strong report will continue the trend of the last few months where economic activity clearly has picked up.

In a nutshell, when the market construes stronger U.S. economic data or Fed commentary to move ahead the potential start of interest-rate hikes, gold tends to weaken. Conversely, if data or Fed verbiage are construed to mean policy-holders will remain on hold for longer, investors look more favorably upon the yellow metal.

The U.S. Federal Open Market Committee is scheduled to meet Tuesday and Wednesday.

The U.S. economic calendar starts light next week but picks up momentum. Major reports include consumer confidence on Tuesday, before the ADP employment report and gross domestic product on Wednesday, then weekly jobless claims and the Chicago Purchasing Managers Index on Thursday. Data next Friday will include nonfarm payrolls, personal income and spending, consumer sentiment and the Institute for Supply Managements manufacturing survey.

The macro side of things will be upper most (in the minds of traders), but we shouldnt forget that geopolitics has emerged in a big way in the last few months, Bhar said. That so far isnt having a significant impact on gold. Yes, its supportive, but is not really driving the price significantly higher yet.

Obviously, things could change very quickly. So the market will be keeping an eye on the geopolitical side of things.

Events in Ukraine and the Gaza are frequently cited for short-term rises in gold, although the metal remains below its mid-March high. Still, Kevin Grady, president of Phoenix Futures and Options LLC on the Comex floor, expressed doubt many traders will be willing to establish fresh short, or bearish, positions during the geopolitical uncertainty.

Grady added that traders will also be watching to see if there is any improvement in physical demand for the metal, which had been subdued. On Friday, there appeared to be signs of physical buying starting to pick up, he continued.

The buying that came in (on a mid-July rally) was driven purely by specs, Grday said. A lot of these people have liquidated.

He said he suspects much of the pullback since the highs of this month is due to long liquidation, in which traders sell to exit from bullish positions in which they previously bought.

Theres a big difference between saying I dont want to be long at this level and I want to be short at this level, he said. I just dont think people want to be short at this level.

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August gold remains around a number of moving averages. After the Comex pit close, the 200-day moving average stood at $1,288.20, the 150-day at $1,290.20 and the 50-day at $1,293.50.

So I think there is a lot of support down here, said Charles Nedoss, senior market strategist with LaSalle Futures. Conversely, youve got some pretty good resistance just a shade above the $1,300 level (the 100-day is at $1,303.10).

For investors who are also focused on gold-mining stocks, most of the major North American producers are scheduled to report second-quarter earnings next week. The list includes Newmont Mining Corp. Yamana Gold Inc. Barrick Gold Corp. Agnico-Eagle Mines Ltd. and Goldcorp Inc.