Gold trading outlook: futures steady near $1,250

Gold futures have been orbiting the key price of $1,250 all week, as investors abstain of big moves ahead of a key Federal Reserve meeting next week. A 15-month high dollar weighed on all dollar-denominated commodities, with gold also hurt by easing geopolitical tensions.

Gold futures for December delivery on the Comex in New York traded at $1 249.9 per troy ounce, up 0.37%, at 8:11 GMT. Prices ranged from $1 247.0 to $1 251.0 per troy ounce. The contract dropped 0.26% on Wednesday, closing at $1 245.3, the lowest close since early June.

Silver for December delivery stood for a 0.39% daily drop at $18.853 per troy ounce, while palladium was up 0.36% at $852.10. October platinum was down 0.09% at $1 379.80.

“Traders are watching the dollar to do anything in gold, and thats been going on for two weeks now,” Bob Haberkorn, a senior commodities broker with RJO Futures, said for The Wall Street Journal.

A significant number of positive economic figures boosted the US dollar to 15-month highs this week. The positive readings bump up speculation that the US Federal Reserve will be quicker to hike the central lending rate from its 0.25% level for the first time in six years, as the need for stimulus wanes.

The Federal Open Market Committee (FOMC), the Feds monetary policy body, meets next week to decide on the banks next steps. A seventh straight $10bn cut in monthly government assets purchases is highly probable, steering the quantitative easing (QE) program to a late-2015 close, with the Fed planning a rate hike after the QE program has concluded. Exactly when the hike would come is the question stirring markets, though, with the Fed expressing plans to probably raise borrowing costs a “significant time after QE has ended”. Analysts, however, project an earlier date, in light of recent upbeat economic data.

Now investors look to fresh jobless claims and retail sales figures to further reinforce speculation of an earlier than previously expected rate hike. Later today are due claims figures, with forecasts of steady inflow of new applications at ~300 000 and slightly higher continuing claims, after the latter logged a seven-year low at 2.464m.

Data on US retail sales on Friday could further strengthen dollar bulls, as analysts expect a 0.6% growth on a monthly basis.

Meanwhile, the Eurozone and the euro, the dollars main competitor, are experiencing difficulties. A series of downbeat economic data and grounded consumer inflation prompted the European Central Bank to lower its lending rate to just 0.05%, the lowest ECB rate on record, in a bid to revive commercial lending, and to support exports, through a weaker euro.

The weaker euro supports exports from the Eurozone, though it also further strengthens the US dollar, pressuring gold and other dollar-denominated commodities.

“The US economy appears to be picking up speed and as monetary policy between the US and other nations differ, the dollar stands to benefit and that will pressure gold lower,” Zhu Runyu, an analyst at CITICS Futures Co., a unit of China’s biggest listed brokerage, said for Bloomberg. “Geopolitical tensions may flare from time to time but it appears to be easing for now.”

Technical support and resistance levels

According to Binary Tribune’s daily analysis, December gold’s central pivot point on the COMEX stands at $1 249.4. In case futures manage to breach the first resistance level at $1 254.4, the contract will probably continue up to test $1 263.4. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 268.4.

If the contract manages to breach the first key support at $1 240.4, it will probably continue to slide and test $1 235.4. With this second key support broken, the movement to the downside may extend to $1 226.4.