Gold trading outlook: futures recover from two-week low on Asian demand, Fed eyed

Gold recovered after falling to its lowest in nearly two weeks as investors assess the importance of increased demand in Asia in anticipation of the two-day FOMC policy meeting.

Comex gold for delivery in December traded at $1 228.8 per troy ounce at 8:58 GMT, down 0.04% on the day, having shifted within a daily range of $1 222.2 – $1 232.0. The precious metal lost 0.20% to $1 229.3 an ounce on Monday.

The Federal Open Market Committee is holding its seventh meeting this year on Tuesday and Wednesday, where policy makers are expected to end Feds monthly bond-buying program. Investors will be paying close attention to Janet Yellens after-meeting statement, looking for hints about a rate increase and the central banks opinion on the global economy.

“People are nervous ahead of the FOMC and big position changes are unlikely. For the moment, I think we will hold between $1,220 and $1,240,” a Hong-Kong trader said for CNBC.

The US dollar index for settlement in December traded at 85.710 at 8:58 GMT, up 0.17%, moving within the range of 85.530 and 85.725 during the day. The contract is traded 1.5% lower from its 4-year high touched on October 3rd.

Chinas net gold imports from main conduit Hong-Kong reached a six-month high in September as the country prepared to celebrate its National Day holiday in the beginning of October. Usually demand from China and India, the biggest gold consumers, jumps in the fourth quarter as people enjoy the festive and wedding season.

India celebrated Dhanteras, the biggest gold-buying festival, last Tuesday, while Diwali, the festival of lights, was celebrated on Thursday.

“Physical demand, most notably from the Far East, continued to provide underlying support for gold,” James Steel, an analyst at HSBC Securities wrote in a note.

In August, US durable good orders were down 18.4% on a monthly basis. However, the Census Bureau is expected to report today a 0.5% increase in September. Later in the day, the Conference Board is to release October data for its Consumer Confidence Index. Analysts project a slight increase to 87.0, compared to Septembers 86.0.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETP and a proxy for investor sentiment towards gold, fell by 0.6% to 745.39 ton on Friday, the lowest since November 2008, and stayed unchanged on Monday.

Pivot points

According to Binary Tribune’s daily analysis, December gold’s central pivot point on the Comex stands $1 228.9. If the contract breaks its first resistance level at $1 232.5, next barrier will be at $1 235.8. In case the second key resistance is broken, the precious metal may attempt to advance to $1 239.4.

If the contract manages to breach the first key support at $1 225.6, it may come to test $1 222.0. With this second key support broken, movement to the downside may extend to $1 218.7.