Gold trading outlook: futures hit lowest since December on US optimism

Gold futures fell to the lowest level since December amid expectations the Federal Reserve might move closer to raising interest rates after Fridays upbeat unemployment data, which sent the dollar soaring to the highest level in four years. Platinum slid to a five-year trough while silver plunged to the lowest since March 2010.

Comex gold futures for settlement in December stood at $1 194.8 per troy ounce at 10:22 GMT, up 0.16% on the day. Prices plummeted to $1 183.3 an ounce earlier in the trading session, the lowest since December 31st, while days high stood at $1 195.6 an ounce. The metal declined by 1.8% on Friday to $1 192.90, settling the week almost 1.9% lower. Gold is headed for its first back-to-back annual decline since 2000, having erased 28% of its value in 2013, the most in three decades.

The precious metal continued its slide, pressured down by a strong dollar and being unable to capitalize on geopolitical tensions in Eastern Ukraine and Islamic State clashes in Iraq and Syria.

The greenback rallied to a four-year high against a basket of major trading peers on Friday after upbeat US jobless data spurred speculations the Federal Reserve might raise interest rates by mid-2015 or earlier.

The US Labor Department reported on Friday that US employers added 248 000 new jobs in September, compared to expectations of a 215 000 reading, while the unemployment rate was logged at a six-year trough of 5.9%, also beating expectations.

The US dollar index for settlement in December was down 0.31% at 86.550 at 10:26 GMT on Monday, having ranged between 86.845 and 86.515 during the day. The US currency gauge surged to a four-year high of 86.870 on Friday and settled the day 1.3% higher at 86.823.

Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., said for Bloomberg: “The U.S. dollar is going one way at the moment and it’s a major headwind. Since the rally in the dollar, we’ve seen further selling in ETF holdings. That’s a dual headwind because it gives a visible lack of confidence for the gold market.”

Assets in the SPDR Gold Trust, the biggest bullion-backed ETF and a major gauge of investor sentiment towards the metal, remained unchanged on Friday at 767.47 tons, the lowest level since December 2008. The fund hasnt seen an inflow since September 10th.

According to data by the U.S. Commodity Futures Trading Commission, net-long positions in gold fell by 15% to 37 743 futures and options combined in the week ended September 30th.

Golds downward movement was accompanied by platinum, palladium and silver which hovered near multi-month lows as well.

Platinum for delivery in January fell for a fifth straight day to trade at $1 225.0 per ounce at 10:26 GMT, down 0.24% for the day. The metal plunged to a session low of $1 186.50, the weakest level since July 2009. Prices have fallen 12% this year as output in top producer South Africa was resumed after strikes, while car sales in Europe, which accounts for a quarter of global demand, grew at the slowest pace in August this year.

Meanwhile, palladium futures for delivery in December traded at $755.65 per ounce, up 0.15% on the day, having fallen to $735.00 earlier in the session, the lowest since end-February. Silver for settlement in the same month rebounded after dropping to $16.640 on Friday, the lowest since March 2010, to trade at $17.045 per ounce at 10:28 GMT, up 1.3% on the day.

Pivot points

According to Binary Tribune’s daily analysis, December gold’s central pivot point on the COMEX stands at $1 199.6. In case futures manage to breach the first resistance level at $1 209.0, the contract will probably continue up to test $1 225.0. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 234.4.

If the contract manages to breach the first key support at $1 183.6, it will probably continue to slide and test $1 174.2. With this second key support broken, the movement to the downside may extend to $1 158.2.