Gold trading outlook: futures advance to highs unseen since January 2015 ahead of US manufacturing data, weak dollar

On Friday gold for delivery in June traded within the range of $1,267.20-$1,295.50. Futures closed at $1,289.20, going up 1.87% on a daily basis. It has been the 33rd gain in the past 62 trading days, a fifth consecutive one and also the sharpest one since March 17th, when the commodity went up 2.86%. The daily high has been the highest price level since January 23rd 2015, when a high of $1,299.80 was registered. In weekly terms, gold surged 4.92% during the past week. It has been the 9th gain in the past 17 weeks and also the steepest one since the week ended on February 14th. The precious metal has risen 0.57% so far during the current month, following four consecutive months of advance. In April it added 4.46% to its value.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in June were inching up 0.01% on Monday to trade at $1,297.15 per troy ounce. The precious metal went up as high as $1,298.55 during the early phase of the European trading session, or the highest price level since January 23rd 2015, while the current daily low was at $1,292.50 per troy ounce, recorded during early Asian trade.

Gold reached 15-month highs on the back of mixed macroeconomic data that came out from the United States last week and also following a rather dovish Policy Statement by the Federal Reserve, which provided little indication of a possible rate hike at the Banks meeting in June.

Today the precious metal may be strongly influenced by the report on US manufacturing sector conditions by the Institute for Supply Management (ISM). Activity in the sector probably increased at a slower pace in April, with the corresponding manufacturing PMI coming in at a reading of 51.5, according to market expectations, down from 51.8 in March. If so, this would be the second consecutive month of expansion, which followed four successive months of contraction. Readings above the key level of 50.0 are indicative of predominant optimism (expanding activity in the sector). In case, however, the PMI slowed down more than anticipated last month, this would have a strong bearish effect on the US dollar and a strong bullish effect on gold. The Institute for Supply Management is to release the official index reading at 14:00 GMT.

A separate report by Markit Economics may show that the final estimate of the US Manufacturing Purchasing Managers’ Index for April confirmed the preliminary reading of 50.8. It has been the lowest PMI reading since September 2009. In March the final seasonally adjusted PMI stood at 51.5, inching up from a preliminary value of 51.4. In case the final PMI for April came above market expectations, this would lead to a moderate bearish impact on gold. The final reading is due out at 13:45 GMT.

Meanwhile, silver futures for delivery in May were retreating 0.56% on the day to trade at $17.780 per troy ounce, after going up as high as $17.930 a troy ounce during the early phase of the Asian trading session. The latter has been an almost exact test of the high from April 29th.

Daily and Weekly Pivot Levels

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

Central Pivot Point – $1,283.97
R1 – $1,300.73
R2 – $1,312.27
R3 – $1,329.03

S1 – $1,272.43
S2 – $1,255.67
S3 – $1,244.13

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

Central Pivot Point – $1,272.10
R1 – $1,312.60
R2 – $1,336.00
R3 – $1,376.50

S1 – $1,248.70
S2 – $1,208.20
S3 – $1,184.80