Gold trading outlook: futures remain close to 27-month highs as markets await the ADP employment numbers

On Wednesday gold for delivery in August traded within the range of $1,357.50-$1,377.45. Futures closed at $1,367.10, rising 0.78% compared to Tuesday’s close. It has been the 136th gain in the past 288 trading days and also a fourth consecutive one. The daily high has been the highest price level since March 17th 2014, when a high of $1,391.40 per troy ounce was registered. The commodity has pared its advance to 3.76% so far during the current month, after advancing 8.71% in June.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in August were edging up 0.15% on Thursday to trade at $1,369.15 per troy ounce. The precious metal went up as high as $1,372.50 during mid-Asian trade, while the current daily low was at $1,364.50 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 inching up 0.04% on the day at a level of 96.17, after climbing as high as 96.29 earlier. Yesterday the gauge reached 96.62, or its highest level since June 27th. The index has dipped 0.04% so far during the current month, following a 0.33% gain in June.

Released Wednesday, the Minutes from the Federal Open Market Committees June 14th-15th meeting revealed that policy makers agreed to wait for further labor market data and the possible effects from the UKs vote on EU membership on global markets before hiking borrowing costs.

According to excerpts from that release: “In their consideration of monetary policy for the period ahead, members judged that the information received since the Committee met in April indicated that the pace of improvement in labor market conditions had slowed in recent months while growth in economic activity appeared to have picked up from the low rates recorded in the fourth quarter of 2015 and the first quarter of 2016.”

“Members noted the considerable uncertainty about the outcome of the vote and its potential economic and financial market consequences. They indicated that they would closely monitor developments associated with the referendum as well as other global economic and financial developments that could affect the U.S. outlook.”

“Members generally agreed that, before assessing whether another step in removing monetary accommodation was warranted, it was prudent to wait for additional data regarding labor market conditions as well as information that would allow them to assess the consequences of the U.K. vote for global financial conditions and the U.S. economic outlook. They judged that their decisions about the appropriate level of the federal funds rate in coming months would depend importantly on whether incoming information corroborated the Committees expectations for economic activity, the labor market, and inflation.”

CMEs Fed Watch tool showed market players saw a 0% chance of a rate hike occurring at the Banks policy meeting in July and also a 5% chance of a reduction in the target range for the federal funds rate.

Today gold trading may be strongly influenced by the monthly report on US non-farm employment growth by Automated Data Processing Inc. (ADP). Employers in the countrys non-farm private sector probably added 160 000 new jobs in June, according to the median estimate by experts, following 173 000 new positions added in May. 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.

In addition, the weekly report by the US Department of Labor may show that the number of Americans, who filed for unemployment assistance for the first time during the business week ended on July 1st, rose to 270 000, according to market consensus, from 268 000 in the preceding week. In case the number of claims met expectations or increased further, this would have a moderate bearish effect on the US dollar and would be bullish for gold. The data are due out at 12:30 GMT.

Meanwhile, silver futures for delivery in September were edging down 0.12% on the day to trade at $20.178 per troy ounce, after going down as low as $20.043 a troy ounce during the late phase of the Asian trading session.

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 – $1,367.35
R1 – $1,377.20
R2 – $1,387.30
R3 – $1,397.15

S1 – $1,357.25
S2 – $1,347.40
S3 – $1,337.30

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

Central Pivot Point – $1,331.60
R1 – $1,351.60
R2 – $1.364.20
R3 – $1,384.20

S1 – $1,319.00
S2 – $1,299.00
S3 – $1,286.40

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

Central Pivot Point – $1,297.02
R1 – $1,386.03
R2 – $1,451.47
R3 – $1,540.48

S1 – $1,231.58
S2 – $1,142.57
S3 – $1,077.13