Gold trading outlook: futures rebound during European trade, US data string awaited for more clues on economic health

On Wednesday (in GMT terms) gold for delivery in December traded within the range of $1,265.1-$1,277.2. Futures closed at $1,266.6, edging down 0.55% compared to Tuesday’s close. It has been the 194th drop in the past 367 trading days and also the steepest one since October 6th. The precious metal has extended its drop to 3.83% 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 0.27% on Thursday to trade at $1,270.0 per troy ounce. The precious metal went up as high as $1,270.2 during mid-European trade, while the current daily low was at $1,265.2 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 0.01% on the day at a level of 98.58, after going down as low as 98.53 earlier. On Tuesday the index climbed to 99.09, which has been its highest level since February 2nd. The gauge has extended its advance to 3.35% so far in October, following a 0.65% drop in September.

Recent upbeat data on activity in US manufacturing and services sectors, sales of new homes, as well as a set of hawkish remarks by several influential Fed officials seemed to have cemented investor expectations that a rate hike by the Federal Reserve may occur in December. Such a move was seen as unlikely in November before the outcome of US presidential election.

The focus now shifts to a vast string of key US data, which may provide further clues over the nations economic health.

Today market participants will be paying a close attention to the monthly report on US durable goods orders. It may show that the value of durable goods orders went up 0.1% in September from a month ago, according to the median forecast by experts. In August, the index performance has been revised up to a 0.1% gain from flat previously. Additionally, the value of durable goods orders, excluding transportation, probably rose 0.2% in September from a month ago, according to expectations, following a revised down 0.2% drop in August. In case the general index rose at a faster-than-projected rate in September, this would have a strong bullish effect on the US dollar and a strong bearish effect on gold. The US Census Bureau is scheduled to release the official report at 12:30 GMT.

A separate report by the National Association of Realtor’s (NAR) may reveal that contracts to buy previously owned homes in the United States were 1.2% more in September from a month ago, according to the median estimate by experts. In August, pending home sales dropped 2.4%, confounding market expectations of a 0.3% increase. In case pending home sales rose at a faster pace than anticipated in September, this would have a moderate bullish effect on the US dollar and would also mount selling pressure on gold.

Meanwhile, investor medium-term rate hike expectations remained unchanged at six-month highs.

According to CME’s FedWatch Tool, as of October 26th, 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 13 business days, and a 78.3% chance of a hike in December, also unchanged compared to the preceding business day. As far as the February 1st 2017 meeting is concerned, the probability of such a move was seen at 79.6% on October 26th, or unchanged compared to 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 – $1,267.7
R2 – $1,268.8
R3 (Range Resistance – Sell) – $1,269.9
R4 (Long Breakout) – $1,273.3
R5 (Breakout Target 1) – $1,277.1
R6 (Breakout Target 2) – $1,278.7

S1 – $1,265.5
S2 – $1,264.4
S3 (Range Support – Buy) – $1,263.3
S4 (Short Breakout) – $1,259.9
S5 (Breakout Target 1) – $1,256.1
S6 (Breakout Target 2) – $1,254.5

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

Central Pivot Point – $1,264.9
R1 – $1,278.7
R2 – $1,289.7
R3 – $1,303.5
R4 – $1,317.3

S1 – $1,253.9
S2 – $1,240.1
S3 – $1,229.1
S4 – $1,218.1

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