Gold trading outlook: futures lose ground a third straight day ahead of US data string, FOMC decision

On Monday gold for delivery in April traded within the range of $1,234.50-$1,258.00. Futures closed at $1,236.90, plummeting 1.33% on a daily basis. It has been the 14th drop in the past 31 trading days, a second consecutive one and also the sharpest one since February 26th, when the yellow metal lost 1.49%. The daily low has been the lowest level since March 2nd, when a low of $1,226.00 per troy ounce was registered. Gold has lost 0.32% of its value so far in March, following two consecutive months of gains.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in April were edging down 0.36% on Tuesday to trade at $1,232.40 per troy ounce. The precious metal went down as low as $1,226.50 during the early phase of the Asian trading session, or the new lowest level since March 2nd, while the current daily high was at $1,238.40 per troy ounce, recorded during early Asian trade as well.

Today gold trading may be strongly influenced by a set of macroeconomic reports out of the United States. The New York Empire State Manufacturing Index probably improved to a value of -10.00 in March, according to the median forecast by experts, from -16.64 in February. If market expectations were met, March would be the 8th straight month, when the gauge inhabited negative territory. Higher-than-anticipated index values will usually have a moderate bullish effect on the US dollar and a moderate bearish effect on gold and silver, respectively. The Federal Reserve Bank of New York is expected to release the official reading at 12:30 GMT.

At the same hour, the US Census Bureau is to report on the retail sales index performance regarding February. US retail sales probably decreased 0.2% in February on a monthly basis, according to the median forecast by experts, following a 0.2% surge in January. The latter has been the 3rd consecutive month of sales growth. Meanwhile, US core retail sales, or retail sales ex autos, probably increased 0.1% in February compared to a month ago, according to market expectations, and following 0.1% growth rates in December and January. Since retail sales provide key information regarding consumer spending trends, while consumer expenditures, on the other hand, account for almost two-thirds of the US Gross Domestic Product, a larger-than-expected rate of decrease in sales would have a strong bearish effect on the US dollar and a strong bullish effect on gold and silver, respectively.

According to the CME Groups Fed Watch, on Monday there was a 96.1% probability that the Federal Open Market Committee (FOMC) will keep the target range for the federal funds rate on hold at its two-day policy meeting, starting Tuesday. A month ago the probability of such a scenario was 81.5%. At its meeting in January the Committee left the target range unchanged between 0.25% and 0.50%, after in December 2015 the first hike in nearly a decade was introduced. Any clues over a further policy tightening tend to have a strong bearish impact on gold, as market players risk appetite heightens.

Meanwhile, silver futures for delivery in March were edging down 0.23% on the day to trade at $15.365 per troy ounce, after going down as low as $15.265 a troy ounce during the early phase of the Asian trading session. It has been the lowest price level since March 10th, when silver registered a daily low of $15.175 per troy ounce.

Daily and Weekly Pivot Levels

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

Central Pivot Point – $1,243.13
R1 – $1,251.77
R2 – $1,266.63
R3 – $1,275.27

S1 – $1,228.27
S2 – $1,219.63
S3 – $1,204.77

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

Central Pivot Point – $1,258.97
R1 – $1,280.43
R2 – $1,302.17
R3 – $1,323.63

S1 – $1,237.23
S2 – $1,215.77
S3 – $1,194.03