Gold trading outlook: futures rebound from fresh 1.5-week lows as markets await a huge series of US data later in the week

On Tuesday (in GMT terms) gold for delivery in December traded within the range of $1,318.8-$1,335.9. Futures closed at $1,323.7, shedding 0.14% compared to Monday’s close. It has been the 178th drop in the past 336 trading days and also a fifth consecutive one. 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 0.94% 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 0.11% on Wednesday to trade at $1,325.1 per troy ounce. The precious metal went up as high as $1,326.0 during early European trade, while the current daily low was at $1,316.6 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 0.09% on the day at a level of 95.45, after going down as low as 95.43 earlier. Yesterday the index climbed to 95.67, or its highest reading since September 6th. The gauge has pared its drop to 0.57% so far in September, following a 0.54% advance in August.

Gold futures continued their slide on Tuesday, as US bond yields reached highs unseen since late August and the US Dollar gained against its peers on the back of rebuilding rate hike expectations regarding the last two FOMC meetings this year.

There have recently been diverging views among Fed officials in regard to borrowing costs. On Monday 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. Such a view opposed what the Fed President for Boston and a FOMC member, Eric Rosengren, said last 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 remove monetary policy accommodation.

A vast string of macroeconomic data is to be released out of the United States on Thursday, including retail sales and industrial production indexes, as well as consumer price inflation and consumer sentiment on Friday, which may shape near-term rate expectations.

According to CME’s FedWatch Tool, as of September 13th, market players saw a 15.0% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, or unchanged compared to the prior business day, and a 22.0% chance of a hike in November, up from 21.2% in the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 55.4% on September 13th, up from 54.5% in the preceding business day.

Meanwhile, silver futures for delivery in December were advancing 0.87% on the day to trade at $19.140 per troy ounce, after going up as high as $19.170 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 – $1,325.3
R2 – $1,326.8
R3 (Range Resistance – Sell) – $1,328.4
R4 (Long Breakout) – $1,333.1
R5 (Breakout Target 1) – $1,338.6
R6 (Breakout Target 2) – $1,340.9

S1 – $1,322.1
S2 – $1,320.6
S3 (Range Support – Buy) – $1,319.0
S4 (Short Breakout) – $1,314.3
S5 (Breakout Target 1) – $1,308.8
S6 (Breakout Target 2) – $1,306.5

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