Gold trading outlook: futures advance a second day ahead of US manufacturing activity data

On Monday gold for delivery in December traded within the range of $1,052.20-$1,069.10. Futures closed at $1,063.70, rising 0.71% on a daily basis, or the most since November 19th, when the yellow metal added 0.86%.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in February were gaining 0.58% on Tuesday to trade at $1,071.50 per troy ounce. The precious metal went up as high as $1,074.00 earlier today, overshooting the upper range breakout level (R3). It has been a lower-high test of the high from last Friday.

Gold has marked a solid depreciation (-6.82%) in November, or the steepest since June 2013 (-12.12%), amid rising expectations of a possible rate hike by the Federal Reserve Bank at its policy meeting on December 15th-16th. The current week is quite saturated with key macroeconomic reports and other events, which usually tend to introduce moderate-to-high volatility in the global markets.

Today the precious metal may be strongly influenced by the two key reports on manufacturing activity in the United States. The final estimate of Markits Manufacturing Purchasing Managers’ Index for November probably confirmed the flash estimate of 52.6, which was reported on November 23rd. If expectations were met, this would be the lowest PMI reading since October 2013, when the final gauge was reported at 51.8. In October the final seasonally adjusted PMI stood at 54.1, inching up from a preliminary value of 54.0. In case the final PMI for November confirmed or came below the preliminary reading, this would cause a moderate bearish impact on the US dollar and a moderate bullish effect on gold respectively. The final reading is due out at 14:45 GMT.

On the other hand, the manufacturing PMI by the Institute for Supply Management (ISM) probably accelerated to a reading of 50.3 in November, according to expectations, from 50.1 in October. The latter has been the lowest PMI reading since May 2013, when the gauge was reported in the area of contraction (49.0). In case the Manufacturing PMI improved more than anticipated in November, this would have a moderate-to-strong bullish effect on the greenback and a strong bearish effect on gold. The ISM is to release the official PMI reading at 15:00 GMT.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for gold are presented as follows:

R1 – $1,065.25
R2 – $1,066.80
R3 (range resistance) – $1,068.35
R4 (range breakout) – $1,073.00

S1 – $1,062.15
S2 – $1,060.60
S3 (range support) – $1,059.05
S4 (range breakout) – $1,054.41

By using the traditional method of calculation, the weekly pivot levels for gold are presented as follows:

Central Pivot Point – $1,062.23
R1 – $1,073.37
R2 – $1,090.53
R3 – $1,101.67

S1 – $1,045.07
S2 – $1,033.93
S3 – $1,016.77