Gold trading outlook: futures edge up after a four-day losing streak, Brainard comments support

On Monday (in GMT terms) gold for delivery in December traded within the range of $1,323.3-$1,333.8. Futures closed at $1,325.6, retreating 0.67% compared to Friday’s close. It has been the 177th drop in the past 335 trading days, a fourth consecutive one and also the sharpest one since August 30th. The daily low has been a level unseen since September 2nd, when a low of $1,307.4 per troy ounce was registered. The precious metal has pared its advance to 1.08% 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 up 0.53% on Tuesday to trade at $1,332.6 per troy ounce. The precious metal went up as high as $1,335.9 during early Asian trade, while the current daily low was at $1,331.0 per troy ounce, recorded during the early phase of the European 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 0.17% on the day at a level of 95.28, after going up as high as 95.32 earlier. The gauge has increased its drop to 0.76% so far in September, following a 0.54% advance in August.

Gold bounced sharply from 1-week lows on Monday, after Federal Reserve Board Governor, Lael Brainard, argued against an early increase in the target range for the federal funds rate. In a statement in front of the Chicago Council on Global Affairs, she stressed on that growth in emerging economies may be an obstacle to such a decision. “Downside risks are also present in emerging market economies, where growth has slowed rapidly in recent years”, Brainard said, cited by CNBC. “Most importantly, China is undergoing a challenging transition from a growth model based on investment, exports, and debt-fueled state-owned enterprises to one driven by consumption, services, and dynamic private businesses. Because of the adjustment costs along this transition path and demographic trends, Chinese growth will likely continue to slow.”

“In the presence of uncertainty and the absence of accelerating inflationary pressures, it would be unwise for policy to foreclose on the possibility of making further gains in the labor market,” she noted, adding also that “disinflation pressure and weak demand from abroad will likely weigh on the U.S. outlook for some time, and fragility in global markets could again pose risks here at home.”

Such a view opposed what the Fed President for Boston and a FOMC member, Eric Rosengren, said on Friday. According to Rosengren, low interest rate environment may increase the possibility of overheating the US economy and, in order to maintain full employment, it is appropriate to gradually tighten monetary policy.

Brainards remarks may continue to weigh on investor expectations of a hike at the Feds policy meeting next week.

According to CME’s FedWatch Tool, as of September 12th, market players saw a 15.0% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, down from 24.0% in the prior business day, and a 20.2% chance of a hike in November, down from 28.7% in the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 54.5% on September 12th, down from 59.2% in the preceding business day.

Meanwhile, silver futures for delivery in December were advancing 1.02% on the day to trade at $19.193 per troy ounce, after going up as high as $19.352 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 – $1,326.6
R2 – $1,327.5
R3 (Range Resistance – Sell) – $1,328.5
R4 (Long Breakout) – $1,331.4
R5 (Breakout Target 1) – $1,334.7
R6 (Breakout Target 2) – $1,336.1

S1 – $1,324.6
S2 – $1,323.7
S3 (Range Support – Buy) – $1,322.7
S4 (Short Breakout) – $1,319.8
S5 (Breakout Target 1) – $1,316.5
S6 (Breakout Target 2) – $1,315.1

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

Central Pivot Point – $1,339.2
R1 – $1,352.9
R2 – $1,371.3
R3 – $1,385.0
R4 – $1,398.7

S1 – $1,320.8
S2 – $1,307.1
S3 – $1,288.7
S4 – $1,270.3

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