Gold trading outlook: futures remain close to fresh 3-week highs, Fed’s rate outlook weighs

On Wednesday gold for delivery in August traded within the range of $1,247.30-$1,268.95. Futures closed at $1,267.55, surging 1.85% compared to Tuesday’s close. It has been the 48th gain in the past 91 trading days and also the steepest one since June 3rd, when the precious metal advanced 2.50%. The daily high has been the highest price level since May 18th, when a high of $1,276.40 was registered. The commodity has added 3.94% to its value so far during the current month, following a 5.77% slump in May.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in August were edging down 0.50% on Thursday to trade at $1,261.25 per troy ounce. The precious metal went up as high as $1,266.30 during early Asian trade, while the current daily low was at $1,260.50 per troy ounce, recorded during the early phase of the European trading session.

The US Dollar Index, a gauge reflecting the relative strength of the greenback against a basket of 6 other major currencies, was edging up 0.09% on the day at a level of 93.67, after reaching 93.68 earlier. Yesterday the gauge fell to 93.41, or its lowest level since May 6th. The index has plunged 2.30% so far in June, after advancing 3.04% in May. Weaker dollar usually favors demand for gold and other dollar-denominated commodities, as they tend to become cheaper to holders of other currencies.

During her speech at the World Affairs Council of Philadelphia earlier this week, Fed Chair Janet Yellen noted that the target for the federal funds rate will probably need to increase gradually over time, so that price stability and maximum sustainable employment in the longer run are ensured, but, however, she provided little or no indication over the timing for such a move. This reduced dramatically the probability of a hike at the upcoming FOMC meeting on June 14th-15th and also at the Committee’s meeting in July. Market players see just a 4% probability of a rate hike occurring in June, a 27% chance of a hike in July and a 44% chance in September, CME Groups FedWatch tool showed.

Today gold trading may be influenced by the weekly government report, reflecting lay-offs in the United States. The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on June 3rd, probably rose to 270 000, according to market consensus, from 267 000 in the preceding week. The latter has been the lowest number of claims since the business week ended on April 29th, when an unrevised level of 257 000 was reported. In case the number of claims met expectations or increased further, this would have a moderate bearish effect on the US dollar and a moderate bullish effect on gold. The US Department of Labor is to release the weekly report at 12:30 GMT.

Meanwhile, silver futures for delivery in July were losing 0.41% on the day to trade at $17.090 per troy ounce, after going down as low as $17.040 a troy ounce during the early phase of the European trading session. The current daily high of $17.235 per troy ounce has been the highest level since May 18th, when a high of $17.320 was registered. Yesterday the commodity rose 4.67%, or marking its largest daily gain since March 17th, when it surged 5.35%.

Daily and Weekly Pivot Levels

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

Central Pivot Point – $1,261.27
R1 – $1,275.23
R2 – $1,282.92
R3 – $1,296.88

S1 – $1,253.58
S2 – $1,239.62
S3 – $1,231.93

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

Central Pivot Point – $1,227.87
R1 – $1,256.73
R2 – $1,273.37
R3 – $1,302.23

S1 – $1,211.23
S2 – $1,182.37
S3 – $1,165.73