Gold trading outlook: futures trade near 15-week lows after mixed US data, official NFP numbers in focus

On Wednesday (in GMT terms) gold for delivery in December traded within the range of $1,264.1-$1,279.4. Futures closed at $1,268.6, inching down 0.09% compared to Tuesday’s close. It has been the 187th drop in the past 352 trading days and also a fourth consecutive one. The daily low has been a level unseen since June 24th, when the commodity went down as low as $1,253.7 per troy ounce. The precious metal has increased its drop to 3.69% so far during the current month, after gaining 0.43% in September.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were edging down 0.13% on Thursday to trade at $1,267.0 per troy ounce. The precious metal went up as high as $1,271.6 during early Asian trade, while the current daily low was at $1,265.1 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 0.21% on the day at a level of 96.33, after going up as high as 96.35 earlier. On Tuesday the index climbed as high as 96.39, which has been its highest level since August 9th. The gauge has increased its advance to 0.99% so far in October, following a 0.65% drop in September.

Gold futures tumbled to fresh lows unseen in 15 weeks on Wednesday, as US 2-year bond yields climbed further to highs not seen since late August. Yesterday, initially, futures extended their rebound following disappointing US employment numbers by the ADP, but this effect seemed to have been outweighed later by the upbeat report on US services sector activity.

Employers in the US non-farm private sector added 154 000 new jobs during September, following the revised down 175 000 positions in August. The median estimate by experts pointed to a lesser slowdown in employment growth (to 170 000). The service-providing sector employment rose by 151 000 jobs last month, while employment in the goods-producing sector increased by 3 000 positions.

At the same time, activity in US services grew the most since October 2015, according to data by the Institute for Supply Management (ISM). The corresponding Non-Manufacturing Purchasing Managers Index accelerated to a reading of 57.1 in September from a 6.5-year low of 51.4 during the preceding month, while outstripping market expectations pointing to an increase to 53.0. The sub-gauges of business activity, new orders and employment growth all rose at a faster rate in September, the ISM said.

Rate hike expectations moderated following these mixed data points, as market players now turn their attention to Fridays government report on Non-Farm Payrolls for further clues on the strength of US labor market.

According to CME’s FedWatch Tool, as of October 5th, market players saw a 15.5% chance of a rate hike occurring at the Federal Reserve’s policy meeting in November, up from 14.5% in the prior business day, and a 59.8% chance of a hike in December, down from 63.4% in the preceding business day. As far as the February 1st 2017 meeting is concerned, the probability of such a move was seen at 63.1% on October 5th, down from 65.6% in the prior business day.

Meanwhile, silver futures for delivery in December were edging up 0.13% on the day to trade at $17.718 per troy ounce, after going up as high as $17.873 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 – $1,270.0
R2 – $1,271.4
R3 (Range Resistance – Sell) – $1,272.8
R4 (Long Breakout) – $1,277.0
R5 (Breakout Target 1) – $1,281.9
R6 (Breakout Target 2) – $1,284.0

S1 – $1,267.2
S2 – $1,265.8
S3 (Range Support – Buy) – $1,264.4
S4 (Short Breakout) – $1,260.2
S5 (Breakout Target 1) – $1,255.3
S6 (Breakout Target 2) – $1,253.2

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

Central Pivot Point – $1,326.4
R1 – $1,336.8
R2 – $1,356.5
R3 – $1,366.9
R4 – $1,377.3

S1 – $1,306.7
S2 – $1,296.3
S3 – $1,276.6
S4 – $1,256.9

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

Central Pivot Point – $1,326.7
R1 – $1,348.0
R2 – $1,378.8
R3 – $1,400.1
R4 – $1,421.3

S1 – $1,295.9
S2 – $1,274.6
S3 – $1,243.8
S4 – $1,212.9