Gold trading outlook: futures trade close to 1-week highs after Chinese PMI, US manufacturing data next in focus

On Monday gold for delivery in April traded within the range of $1,220.70-$1,242.60. Futures closed at $1,241.10, surging 1.56% on a daily basis. It has been the 13th gain in the past 21 trading days. The daily high has been the highest price level since February 24th, when the commodity recorded a high of $1,250.10 per troy ounce.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in April were inching up 0.02% on Tuesday to trade at $1,241.30 per troy ounce. The precious metal went up as high as $1,249.30 during early Asian trade, while the current daily low was at $1,237.50 per troy ounce, recorded again during the early phase of the Asian session.

Gold gained ground in Asia, after earlier on Tuesday the China Federation of Logistics and Purchasing reported its Manufacturing PMI slowed down more than anticipated in February, slipping to a reading of 49.0. It has been the lowest PMI level since November 2011. The index slowed down for a second consecutive month, after in January it stood at 49.4. February has also been the seventh straight month, when the Chinese Manufacturing PMI inhabited the area below 50.0, which separates optimistic from pessimistic views on general business conditions in the sector.

A separate report by Markit Economics revealed that the Caixin Manufacturing PMI tumbled to 48.0 in February, missing the median forecast by analysts pointing to a lesser drop. It has been the lowest PMI level since September 2015. In January the gauge was reported at 48.4. Chinese manufacturing data tend to have a significant impact on the yellow metal, as China is the second largest consumer of gold worldwide behind India.

Today gold trading may be influenced by the monthly report on US manufacturing activity by the Institute for Supply Management. Activity in United States’ manufacturing sector probably improved in February, with the corresponding manufacturing PMI coming in at a reading of 48.8, according to expectations, up from 48.2 in December and January. The latter has been the lowest PMI reading since June 2009, when the gauge was reported at 44.8. In case the manufacturing benchmark improved more than anticipated in February, this would have a strong bullish effect on the US dollar and a strong bearish effect on gold, respectively. The Institute for Supply Management (ISM) is to release the official reading at 15:00 GMT.

A separate report by Markit Economics may show that the final estimate of the Manufacturing Purchasing Managers’ Index for February probably confirmed the flash estimate of 51.0, which was reported on February 22nd. If so, it would be the lowest index level since October 2012, when a final reading of 51.0 was reported. In January the final seasonally adjusted PMI stood at 52.4, inching down from a preliminary value of 52.7. The final reading is due out at 14:45 GMT.

Meanwhile, silver futures for delivery in March were little changed on the day to trade at $14.935 per troy ounce, after climbing as high as $15.015 during mid-Asian trade, or the highest price level since February 26th.

Daily and Weekly Pivot Levels

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

Central Pivot Point – $1,234.80
R1 – $1,248.90
R2 – $1,256.70
R3 – $1,270.80

S1 – $1,227.00
S2 – $1,212.90
S3 – $1,205.10

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