Gold trading outlook: futures attempt to extend Tuesday’s gains ahead of US data string, Fed speakers

On Tuesday (in GMT terms) gold for delivery in December traded within the range of $1,218.6-$1,231.4. Futures closed at $1,224.5, rebounding 0.23% compared to Monday’s close. It has been the 178th gain in the past 381 trading days. The precious metal has pared its slump to 3.82% so far during the current month, after losing 3.34% in October.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were edging up 0.22% on Wednesday to trade at $1,227.2 per troy ounce. The precious metal went up as high as $1,233.1 during early Asian trade, while the current daily low was at $1,225.1 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 inching up 0.08% on the day at a level of 100.28, after going up as high as 100.34 earlier. The latter has been the highest level for this index since December 3rd 2015. The gauge has extended its advance to 1.86% so far in November, following a 3.18% surge in October.

After a six-day losing streak, gold futures rebounded from 5.5-month lows on Tuesday and attempted to extend gains during Wednesdays Asian session, but the upside may be restrained as rising rate hike expectations regarding the Feds December meeting continued to boost US bond yields and pushed the US Dollar to a fresh 11.5-month high.

Today gold trading may be influenced by the monthly report on US producer price inflation. Annual producer prices probably rose 1.2% in October, according to the median estimate by experts. If so, this would be the fastest annual rate of growth since November 2014. In September, prices went up 0.7%, while exceeding market expectations. In case annual producer prices rose at a faster rate than anticipated in October, this would have a limited-to-moderate bullish effect on the US dollar and would pressure gold. The Bureau of Labor Statistics is expected to report on the official PPI performance at 13:30 GMT.

A separate report may show that industrial output in the United States rose 0.2% in October, according to market expectations, following a 0.1% increase in September. A larger-than-projected monthly increase in the index would have a moderate bullish effect on the US dollar and a moderate bearish effect on gold. The Board of Governors of the Federal Reserve is to release the official production data at 14:15 GMT.

Additionally, market players will be paying a close attention to the public appearance of several Fed officials. At 12:30 GMT the Fed President for Minneapolis, Neel Kashkari, is to speak at the New York Economic Club, followed by the Fed President for Philadelphia, Patrick Harker, who is scheduled to speak on the purposes and functions of the Federal Reserve in Philadelphia at 22:30 GMT. Economic outlook or monetary policy-related remarks would heighten USD and gold volatility.

Meanwhile, medium-term investor rate hike expectations continued to increase, hitting highs unseen in more than a year.

According to CME’s FedWatch Tool, as of November 15th, market players saw a 90.6% chance of a rate hike occurring at the Federal Reserve’s policy meeting in December, up from 85.8% in the prior business day, and a 91.1% chance of a hike in February 2017, up from 86.7% in the preceding business day. As far as the March 15th 2017 meeting is concerned, the probability of such a move was seen at 91.9% on November 15th, up from 88.5% 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 – $1,225.7
R2 – $1,226.8
R3 (Range Resistance – Sell) – $1,228.0
R4 (Long Breakout) – $1,231.5
R5 (Breakout Target 1) – $1,235.7
R6 (Breakout Target 2) – $1,237.4

S1 – $1,223.3
S2 – $1,222.2
S3 (Range Support – Buy) – $1,221.0
S4 (Short Breakout) – $1,217.5
S5 (Breakout Target 1) – $1,213.3
S6 (Breakout Target 2) – $1,211.6

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

Central Pivot Point – $1,260.4
R1 – $1,302.2
R2 – $1,380.0
R3 – $1,421.8
R4 – $1,463.5

S1 – $1,182.6
S2 – $1,140.8
S3 – $1,063.0
S4 – $985.1

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

Central Pivot Point – $1,279.6
R1 – $1,316.1
R2 – $1,359.0
R3 – $1,395.5
R4 – $1,431.9

S1 – $1,236.7
S2 – $1,200.2
S3 – $1,157.3
S4 – $1,114.3