Gold trading outlook: futures distance from recent lows at the start of an eventful week

On Friday gold for delivery in April traded within the range of $1,212.20-$1,239.10. Futures closed at $1,219.80, plummeting 1.49% on a daily basis. It has been the 8th drop in the past 20 trading days. The daily low has been the lowest price level since February 23rd, when the commodity recorded a low of $1,207.40 per troy ounce. In weekly terms, gold devalued 0.86% last week, while extending the drop from the week ended on February 21st. The yellow metal, on the other hand, has added 10.42% to its value so far during the current month, following another 5.29% gain in January.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in April were gaining 0.92% on Monday to trade at $1,233.20 per troy ounce. The precious metal went up as high as $1,233.70 during early European trade, while the current daily low was at $1,216.40 per troy ounce, recorded during the early phase of the Asian session.

Today gold trading may be influenced by the monthly survey on manufacturing activity in the Chicago area. The Chicago Purchasing Managers’ Index (PMI) probably slowed down to a reading of 54.0 in February, according to market expectations, from 55.6 during the prior month. The latter has been the highest reading since October 2015, when the PMI came in at 56.2. In case the PMI slowed down more than forecast, this would have a moderate bearish effect on the US dollar and a moderate bullish effect on gold, respectively. The ISM-Chicago Inc. will release the official barometer reading at 14:45 GMT.

Later this week market players will be watching closely the US and the Chinese reports on manufacturing activity, as well as the highly anticipated government data on employment growth in all US economic segments with the exception of farming. Last week it became clear that personal spending, consumer price inflation and consumer sentiment in the United States all came above market expectations, while the US revised GDP grew at an annualized rate of 1.0% in the final quarter of 2015, or well above the median forecast by experts and the preliminary estimate, following a 2.0% growth in Q3.

The probability that the Federal Reserve Bank may hike borrowing costs in June this year rose to 32.2% from 19.7% before the release of the positive data string, CME Group’s FedWatch site reported.

Meanwhile, silver futures for delivery in March were little changed on the day to trade at $14.765 per troy ounce, after slipping to as low as $14.610 during mid-Asian trade, or the lowest price level since February 3rd.

Daily and Weekly Pivot Levels

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

Central Pivot Point – $1,223.70
R1 – $1,235.20
R2 – $1,250.60
R3 – $1,262.10

S1 – $1,208.30
S2 – $1,196.80
S3 – $1,181.40

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

Central Pivot Point – $1,224.30
R1 – $1,245.60
R2 – $1,271.40
R3 – $1,292.70

S1 – $1,198.50
S2 – $1,177.20
S3 – $1,151.40