Gold trading outlook: futures bounce from near-2-week lows as the UK votes on EU membership

On Wednesday gold for delivery in August traded within the range of $1,263.50-$1,273.40. Futures closed at $1,265.35, edging down 0.41% compared to Tuesday’s close. It has been the 149th drop in the past 278 trading days and also a fourth consecutive one. The daily low has been the lowest price level since June 9th, when a low of $1,258.10 was registered. The commodity has trimmed its advance to 4.68% so far during the current month, following a 5.77% slump registered in May.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in August were edging up 0.44% on Thursday to trade at $1,270.95 per troy ounce. The precious metal went up as high as $1,274.50 during late Asian trade, while the current daily low was at $1,262.00 per troy ounce, recorded during the early phase of the Asian 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 down 0.23% on the day at a level of 93.59, after reaching 93.48 earlier. The latter has been an almost exact test of the June 21st low. The index has extended losses to 2.43% so far in June, after advancing 3.04% in May.

Today the United Kingdom votes on whether to remain a member of the European Union, or to take its leave from the bloc. The highly anticipated official result is expected early on Friday. A potential Brexit would have a strong bullish impact on gold, as the overall uncertainty associated with such an outcome would urge market players to bolster their holdings of safe-haven assets. A potential “Remain” vote would have the opposite effect.

The precious metal has been holding within a relatively tight range since Tuesdays US session. Back then in a testimony in front of the Committee on Banking, Housing and Urban Affairs, the Fed Chair, Janet Yellen, noted that a cautious approach to policy tightening remains appropriate, given the slowdown in hiring and the uncertainty in regard to the US macroeconomic outlook.

“The FOMC continues to anticipate that economic conditions will improve further and that the economy will evolve in a manner that will warrant only gradual increases in the federal funds rate. In addition, the Committee expects that the federal funds rate is likely to remain, for some time, below the levels that are expected to prevail in the longer run because headwinds–which include restraint on U.S. economic activity from economic and financial developments abroad, subdued household formation, and meager productivity growth–mean that the interest rate needed to keep the economy operating near its potential is low by historical standards. If these headwinds slowly fade over time, as the Committee expects, then gradual increases in the federal funds rate are likely to be needed”, Yellen said.

Meanwhile, silver futures for delivery in July were gaining 1.01% on the day to trade at $17.425 per troy ounce, after going up as high as $17.495 a troy ounce during the early phase of the European trading session. The latter has been the highest price level since June 21st, when silver registered a high of $17.605 per troy ounce.

Daily, Weekly and Monthly Pivot Levels

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

Central Pivot Point – $1,267.42
R1 – $1,271.33
R2 – $1,277.32
R3 – $1,281.23

S1 – $1,261.43
S2 – $1,257.52
S3 – $1,251.53

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

Central Pivot Point – $1,293.97
R1 – $1,314.93
R2 – $1,337.37
R3 – $1,358.33

S1 – $1,271.53
S2 – $1,250.57
S3 – $1,228.13

In monthly terms, for the yellow metal we have the following pivots:

Central Pivot Point – $1,239.40
R1 – $1,279.80
R2 – $1,344.80
R3 – $1,385.20

S1 – $1,174.40
S2 – $1,134.00
S3 – $1,069.00