Gold trading outlook: futures remain rangebound and close to 3-week highs as markets await the ADP employment report

On Tuesday (in GMT terms) gold for delivery in December traded within the range of $1,353.7-$1,374.2. Futures closed at $1,372.6, soaring 0.96% compared to Monday’s close. It has been the 146th gain in the past 307 trading days and also a sixth consecutive one. The daily high has been the highest price level for the metal since July 11th. The commodity has increased its advance to 1.11% so far in August, after surging 2.86% in July.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were edging down 0.12% on Wednesday to trade at $1,370.9 per troy ounce. The precious metal went up as high as $1,373.1 during early Asian trade, while the current daily low was at $1,368.6 per troy ounce, recorded during the mid 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 up 0.19% on the day at a level of 95.20, after going up as high as 95.27 earlier. The gauge has fallen 0.31% so far during the current month, following a 0.74% retreat in July.

Today gold trading may be strongly influenced by the monthly report on non-farm private sector employment in the United States. Employers in the sector probably added 170 000 new jobs during July, according to the median estimate by experts, following 172 000 new positions added in June. If expectations were met, this would be the lowest growth in non-farm private sector employment since April, when a revised up 166 000 jobs were added. In case new jobs growth fell short of expectations in July, this would have a moderate-to-strong bearish effect on the US dollar and a moderate-to-strong bullish effect on gold. The official figure is scheduled to be released at 12:15 GMT.

A separate report may show that activity in United States’ sector of services probably increased at a slower pace in July from a month ago. The corresponding non-manufacturing Purchasing Managers Index probably stood at a reading of 56.0 in July, according to the median forecast by experts, down from a level of 56.5 in June. The latter has been the highest PMI reading since October 2015, when the gauge was reported at 59.1. If expectations were met, July would be the 79th consecutive month, when the PMI stood in the area above 50.0. In case the Non-Manufacturing PMI slowed down more than anticipated in July, this would have a strong bearish effect on the US Dollar and a strong bullish effect on the yellow metal. The Institute for Supply Management (ISM) is to release the official reading at 14:00 GMT.

This is another set of macro data, which will provide further clarity if economic development in the country is resilient enough, so that it can warrant a rate hike by the end of the year.

According to CME’s FedWatch Tool, as of August 2nd, market players saw a 12.0% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, down from 18.0% in the prior business day, and a 13.8% chance of a hike in November, down from 19.7% during the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 38.5% on August 2nd, down from 42.7% in the preceding business day.

Meanwhile, silver futures for delivery in September were edging down 0.14% on the day to trade at $20.672 per troy ounce, after going down as low as $20.635 a troy ounce during the late phase of the Asian trading session.

Daily, Weekly and Monthly Pivot Levels

By employing the Camarilla calculation method, the daily levels of importance for gold are presented as follows:

R1 – $1,374.5
R2 – $1,376.4
R3 (Range Resistance – Sell) – $1,378.2
R4 (Long Breakout) – $1,383.9
R5 (Breakout Target 1) – $1,390.5
R6 (Breakout Target 2) – $1,393.4

S1 – $1,370.7
S2 – $1,368.8
S3 (Range Support – Buy) – $1,367.0
S4 (Short Breakout) – $1,361.3
S5 (Breakout Target 1) – $1,354.7
S6 (Breakout Target 2) – $1,351.8

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

Central Pivot Point – $1,346.3
R1 – $1,373.2
R2 – $1,389.0
R3 – $1,415.9
R4 – $1,442.9

S1 – $1,330.5
S2 – $1,303.6
S3 – $1,287.8
S4 – $1,272.1

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

Central Pivot Point – $1,348.5
R1 – $1,386.5
R2 – $1,415.4
R3 – $1,453.4
R4 – $1,491.4

S1 – $1,319.5
S2 – $1,281.5
S3 – $1,252.6
S4 – $1,223.6