Gold trading outlook: futures remain near one-week highs in thin trade, soft US employment report supports

On Friday (in GMT terms) gold for delivery in December traded within the range of $1,307.4-$1,334.0. Futures closed at $1,326.7, rising 0.73% compared to Thursday’s close. It has been the 157th gain in the past 330 trading days and also a second consecutive one. The daily high has been a level unseen since August 26th, when a high of $1,346.0 was recorded. In weekly terms, the commodity added a mere 0.06% to its value during the past week. It has been the 19th gain in the past 35 weeks. The precious metal has increased its advance to 1.17% so far during the current month, after losing 3.40% in August.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were edging down 0.14% on Monday to trade at $1,329.9 per troy ounce. The precious metal went up as high as $1,331.0 during late Asian trade, while the current daily low was at $1,325.5 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 0.27% on the day at a level of 95.61, after going down as low as 95.55 earlier. The gauge has extended its drop to 0.42% so far in September, following a 0.54% advance in August.

Last Friday gold futures continued to advance, reaching highs unseen in a week, on the back of weaker US Dollar, after the Bureau of Labor Statistics reported US non-farm employers added 151 000 job positions in August, which fell short of market expectations (180 000). it has been the lowest job growth in four months, after in July a revised up 275 000 new jobs were added. Employment was higher in service-providing industries and lower in manufacturing, mining and construction sectors. At the same time, the rate of unemployment in the country remained at 4.9% for a third straight month in August, missing expectations of a drop to 4.8%.

A day earlier the Institute for Supply Management said that US manufacturing activity shrank in August. The corresponding Purchasing Managers Index tumbled to a reading of 49.4 last month, or far more than what analysts had projected, after being at 52.6 in July. It has been the lowest PMI level in 7 months, as the gauges of new orders and production fell below the key 50.0 level, while the sub-index of employment conditions plunged further into the contraction area.

These soft data points raised doubts whether an early rate hike by the Fed will take place.

According to CME’s FedWatch Tool, as of September 2nd, market players saw a 21.0% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, down from 24.0% in the prior three business days, and a 25.9% chance of a hike in November, down from 30.3% in the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 50.6% on September 2nd, down from 53.6% in the preceding business day.

Trading volumes are to remain thin today, as Monday marks the Labor Day holiday in the United States.

Meanwhile, silver futures for delivery in December were inching down 0.04% on the day to trade at $19.462 per troy ounce, after going down as low as $19.380 a troy ounce during the mid 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 – $1,329.1
R2 – $1,331.6
R3 (Range Resistance – Sell) – $1,334.0
R4 (Long Breakout) – $1,341.3
R5 (Breakout Target 1) – $1,349.9
R6 (Breakout Target 2) – $1,353.7

S1 – $1,324.3
S2 – $1,321.8
S3 (Range Support – Buy) – $1,319.4
S4 (Short Breakout) – $1,312.1
S5 (Breakout Target 1) – $1,303.5
S6 (Breakout Target 2) – $1,299.7

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

Central Pivot Point – $1,322.1
R1 – $1,338.6
R2 – $1,350.6
R3 – $1,367.1
R4 – $1,383.7

S1 – $1,310.1
S2 – $1,293.6
S3 – $1,281.6
S4 – $1,269.7

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

Central Pivot Point – $1,330.8
R1 – $1,354.8
R2 – $1,398.1
R3 – $1,422.1
R4 – $1,446.0

S1 – $1,287.5
S2 – $1,263.5
S3 – $1,220.2
S4 – $1,176.8