Gold trading outlook: futures little changed, focus to shift to the Jackson Hole symposium

On Monday (in GMT terms) gold for delivery in December traded within the range of $1,335.4-$1,345.7. Futures closed at $1,343.4, shedding 0.21% compared to Friday’s close. It has been the 169th drop in the past 321 trading days and also a second consecutive one. The daily low has been a level unseen since August 8th, when a low of $1,335.3 was registered. The precious metal has increased its slump to 1.04% 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 inching up 0.01% on Tuesday to trade at $1,343.6 per troy ounce. The precious metal went up as high as $1,348.2 during early European trade, while the current daily low was at $1,338.9 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 down 0.16% on the day at a level of 94.37, after going down as low as 94.19 earlier. The gauge has increased its slump to 1.17% so far during the current month, following a 0.74% retreat in July.

Today gold trading may be influenced by the preliminary report on US manufacturing sector conditions, released by Markit. Manufacturing activity in the country probably increased at a slower rate in August, with the corresponding preliminary Purchasing Managers’ Index coming in at a reading of 52.7, according to market expectations. In July the final seasonally adjusted PMI stood at 52.9, while confirming the preliminary reading reported on July 22nd. The latter has been the highest PMI level since October 2015 (54.1), mostly supported by higher rates of growth in production, new orders and employment. In case the flash manufacturing PMI showed a worse-than-anticipated performance, this would have a moderate bearish effect on the US dollar and a moderate bullish effect on gold. The preliminary data are due out at 13:45 GMT.

Gold has recently been pressured following a set of rather hawkish remarks by several Federal Reserve officials. At a conference in Aspen, Colorado during the weekend, Feds vice chairman, Stanley Fischer said the central bank was close to achieving its objectives for full employment and 2% annual inflation. Last week the Fed President for San Francisco, John Williams noted that a too long stand-by period for borrowing costs could damage US economy. Additionally, the Fed President for New York, William Dudley, and the Fed President for Atlanta, Dennis Lockhart, have also expressed their support of the view that the Bank needs to return to an expected run of gradual interest rate increases.

As the week progresses, market focus is to gradually shift to the key Jackson Hole symposium at the end of the week, where the Fed Chair, Janet Yellen, may deliver hints over the timing of the Banks next rate hike.

According to CME’s FedWatch Tool, as of August 22nd, market players saw a 15.0% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, up from 12.0% in the prior business day, and a 22.0% chance of a hike in November, up from 19.3% during the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 48.1% on August 22nd, up from 46.2% in the preceding business day.

Meanwhile, silver futures for delivery in September were rebounding after a four-day losing streak, up 0.74% to trade at $18.998 per troy ounce, after going up as high as $19.090 a troy ounce during the early phase of the European 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 – $1,344.3
R2 – $1,345.3
R3 (Range Resistance – Sell) – $1,346.2
R4 (Long Breakout) – $1,349.1
R5 (Breakout Target 1) – $1,352.4
R6 (Breakout Target 2) – $1,353.8

S1 – $1,342.5
S2 – $1,341.5
S3 (Range Support – Buy) – $1,340.6
S4 (Short Breakout) – $1,337.7
S5 (Breakout Target 1) – $1,334.4
S6 (Breakout Target 2) – $1,333.0

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

Central Pivot Point – $1,350.3
R1 – $1,360.2
R2 – $1,374.1
R3 – $1,384.0
R4 – $1,393.8

S1 – $1,336.4
S2 – $1,326.5
S3 – $1,312.6
S4 – $1,298.6

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