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Gold trading outlook: futures trade close to 1-week highs, Fed Yellen’s remarks seen as dovish

On Tuesday gold for delivery in June traded within the range of $1,217.00-$1,245.00. Futures closed at $1,241.20, surging 1.37% on a daily basis. It has been the 21st gain in the past 40 trading days, a second consecutive one and also the steepest one since March 17th. The daily high has been the highest level since March 23rd, when a high of $1,247.70 was recorded. The yellow metal has added 0.65% to its value so far during the current month.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in June were edging up 0.18% on Wednesday to trade at $1,243.40 per troy ounce. The precious metal went down as low as $1,236.70 during the late phase of the Asian trading session, while the current daily high was at $1,244.70 per troy ounce, recorded during early Asian trade.

During her statement at the Economic Club of New York Federal Reserve Chair Janet Yellen used a rather dovish tone, saying that future policy adjustment needs to be cautious, because of uncertainty regarding growth and inflation outlook as well as market turbulence. According to extracts from her speech on March 29th: “…this expectation of fading headwinds and a rising neutral rate is a key reason for the FOMC’s assessment that gradual increases in the federal funds rate over time will likely be appropriate. That said, this assessment is only a forecast. The future path of the federal funds rate is necessarily uncertain because economic activity and inflation will likely evolve in unexpected ways.”

“In particular, developments abroad imply that meeting our objectives for employment and inflation will likely require a somewhat lower path for the federal funds rate than was anticipated in December.”

“If economic conditions were to strengthen considerably more than currently expected, the FOMC could readily raise its target range for the federal funds rate to stabilize the economy. By contrast, if the expansion was to falter or if inflation was to remain stubbornly low, the FOMC would be able to provide only a modest degree of additional stimulus by cutting the federal funds rate back to near zero.”

“Even if the federal funds rate were to return to near zero, the FOMC would still have considerable scope to provide additional accommodation. In particular, we could use the approaches that we and other central banks successfully employed in the wake of the financial crisis to put additional downward pressure on long-term interest rates and so support the economy.”

In addition, today gold trading may be strongly influenced by the monthly report on US employment change by Automated Data Processing Inc. Employers in the US non-farm private sector probably added 194 000 new jobs during March, according to the median estimate by experts, following 214 000 new positions added in February. In case new jobs growth outpaced expectations, this would have a moderate-to-strong bullish effect on the US dollar and a moderate-to-strong bearish effect on gold. The official figure is scheduled to be released at 12:15 GMT.

Meanwhile, silver futures for delivery in May were gaining 0.59% on the day to trade at $15.455 per troy ounce, after going up as high as $15.465 a troy ounce during the early phase of the European trading session. It has been the highest price level since March 23rd, when the commodity recorded a daily high of $15.935 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 – $1,234.40
R1 – $1,251.80
R2 – $1,262.40
R3 – $1,279.80

S1 – $1,223.80
S2 – $1,206.40
S3 – $1,195.80

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

Central Pivot Point – $1,230.60
R1 – $1,247.00
R2 – $1,272.60
R3 – $1,289.00

S1 – $1,205.00
S2 – $1,188.60
S3 – $1,163.00

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