Gold trading outlook: futures gain a third day, hit 2-week highs ahead of Fed speakers

On Tuesday (in GMT terms) gold for delivery in December traded within the range of $1,255.9-$1,265.6. Futures closed at $1,262.9, edging up 0.50% compared to Monday’s close. It has been the 169th gain in the past 361 trading days and also a second consecutive one. The daily high has been a level unseen since October 10th, when a high of $1,266.8 a troy ounce was registered. The precious metal has pared its drop to 4.12% 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 up 0.59% on Wednesday to trade at $1,270.4 per troy ounce. The precious metal went up as high as $1,271.9 during mid-European trade, or its highest level since October 5th, while the current daily low was at $1,261.1 per troy ounce, recorded during the late 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 0.16% on the day at a level of 97.72, after going down as low as 97.65 earlier. On Monday the index climbed to 98.15, or its highest level since March 10th. The gauge has pared its advance to 2.43% so far in October, following a 0.65% drop in September.

Yesterday gold futures rose a second straight day, touching a one-week high, as US bond yields eased from recent four-month highs and the US Dollar eased from seven-month highs, after a report by the US Bureau of Labor Statistics showed annual core consumer price inflation slowed down in September. The Core CPI rose 2.2% year-on-year last month, decelerating from a 2.3% increase in August. On the other hand, the general index of consumer prices was reported to have surged 1.5% year-on-year in September in line with the market consensus. It has been the highest annual consumer inflation since October 2014, supported by an increase in costs of shelter, medical care and transportation.

The CPI report came one day after during his speech at the Economic Club of New York, Fed Vice Chair, Stanley Fischer, noted that the Bank was “very close” to its objectives regarding US employment and inflation. However, Fischer did not make any remarks on the possibility of raising the target range for the federal funds rate at the upcoming FOMC meetings in November and December.

Today market participants will be paying a close attention to a set of public appearances by Federal Reserve officials. At 12:45 GMT the Fed President for San Francisco and also a FOMC member, John Williams, is expected to speak on the diversity in the financial system in Newark, New Jersey. A few hours later, at 17:30 GMT, the Fed President for Dallas, Robert Kaplan, who does not have a voting right but takes part in policy discussions, is to take a statement at luncheon, sponsored by Fort Worth Chamber of Commerce in Fort Worth. Remarks on economic outlook or monetary policy may heighten USD and gold volatility.

Meanwhile, investor medium-term rate hike expectations eased from four-month highs.

According to CME’s FedWatch Tool, as of October 18th, market players saw an 8.3% chance of a rate hike occurring at the Federal Reserve’s policy meeting in November, or unchanged compared to the prior seven business days, and a 65.1% chance of a hike in December, down from 69.5% in the preceding business day. As far as the February 1st 2017 meeting is concerned, the probability of such a move was seen at 67.2% on October 18th, down from 71.3% in the prior business day.

Daily, Weekly and Monthly Pivot Levels

By employing the Camarilla calculation method, the daily levels of importance for gold are presented as follows:

R1 – $1,263.8
R2 – $1,264.7
R3 (Range Resistance – Sell) – $1,265.6
R4 (Long Breakout) – $1,268.2
R5 (Breakout Target 1) – $1,271.4
R6 (Breakout Target 2) – $1,272.7

S1 – $1,262.0
S2 – $1,261.1
S3 (Range Support – Buy) – $1,260.2
S4 (Short Breakout) – $1,257.6
S5 (Breakout Target 1) – $1,254.4
S6 (Breakout Target 2) – $1,253.1

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

Central Pivot Point – $1,256.4
R1 – $1,265.9
R2 – $1,276.3
R3 – $1,285.8
R4 – $1,295.3

S1 – $1,246.0
S2 – $1,236.5
S3 – $1,226.1
S4 – $1,215.7

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