Gold trading outlook: futures bounce from fresh 1-month lows ahead of Yellen’s speech at Jackson Hole

On Thursday (in GMT terms) gold for delivery in December traded within the range of $1,321.0-$1,330.2. Futures closed at $1,324.6, edging down 0.38% compared to Wednesday’s close. It has been the 171st drop in the past 324 trading days and also a second consecutive one. The daily low has been a level unseen since July 25th, when the commodity recorded a low of $1,319.3 a troy ounce. The precious metal has increased its slump to 2.42% 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 up 0.33% on Friday to trade at $1,329.0 per troy ounce. The precious metal went up as high as $1,329.2 during mid European trade, while the current daily low was at $1,323.7 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 down 0.07% on the day at a level of 94.61, after going down as low as 94.50 earlier. The gauge has pared its slump to 0.92% so far during the current month, following a 0.74% retreat in July.

Today gold trading may be strongly influenced by the revised data on US Gross Domestic Product. The second GDP estimate probably pointed to an annualized rate of growth of 1.1% in the second quarter of 2016, according to the median forecast by analysts. The preliminary GDP estimate for Q2, reported on July 29th, pointed to an annual growth of 1.2%, or the fastest since Q4 2015. In Q1 2016 the US economy expanded at an annualized rate of 1.1%, according to final data. In case the growth rate revision down was steeper than projected in Q2, this would have a strong bearish effect on the US dollar and a strong bullish effect on gold. The second GDP estimate is to be released at 12:30 GMT.

Additionally, at 14:00 GMT the Federal Reserve Chair, Janet Yellen, is expected to speak at the Jackson Hole Economic Policy Symposium in Wyoming, which commenced yesterday. Sponsored by the Federal Reserve Bank of Kansas City since 1978, the forum is attended by central bankers, policy experts, academics and financial market investors, who discuss a number of economic topics, including monetary policies. In case Yellen offers clues over the timing of the next rate hike, or any remarks on US macroeconomic outlook, USD volatility (and respectively that of gold) would certainly increase.

According to CME’s FedWatch Tool, as of August 25th, market players saw a 21.0% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, or unchanged compared to the prior two business days, and a 27.5% chance of a hike in November, up from 25.9% in the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 51.8% on August 25th, up from 50.6% in the preceding business day.

Meanwhile, silver futures for delivery in September were advancing 0.75% to trade at $18.627 per troy ounce, after going up as high as $18.640 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 – $1,325.4
R2 – $1,326.3
R3 (Range Resistance – Sell) – $1,327.1
R4 (Long Breakout) – $1,329.7
R5 (Breakout Target 1) – $1,332.6
R6 (Breakout Target 2) – $1,333.8

S1 – $1,323.8
S2 – $1,322.9
S3 (Range Support – Buy) – $1,322.1
S4 (Short Breakout) – $1,319.5
S5 (Breakout Target 1) – $1,316.6
S6 (Breakout Target 2) – $1,315.4

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