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Gold trading outlook: futures hold within a range ahead of Yellen’s testimony, US CPI report

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On Wednesday (in GMT terms) gold for delivery in December traded within the range of $1,221.0-$1,233.1. Futures closed at $1,223.9, inching down 0.05% compared to Tuesday’s close. It has been the 204th drop in the past 382 trading days. The precious metal has extended its slump to 3.86% 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 0.25% on Thursday to trade at $1,227.0 per troy ounce. The precious metal went up as high as $1,229.4 during early European trade, while the current daily low was at $1,224.4 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 edging down 0.27% on the day at a level of 100.11, after going down as low as 100.04 earlier. Yesterday the index climbed as high as 100.60, which has been its highest level since April 2003. The gauge has pared its advance to 1.75% so far in November, following a 3.18% surge in October.

Gold futures held within a relatively tight range during the past couple of trading days as markets awaited key macroeconomic reports coming out of the United States as well as statements by a number of Federal Reserve officials, scheduled at the end of the current week.

Today gold trading may be strongly influenced by the monthly report on US consumer price inflation. Annualized consumer inflation probably accelerated to 1.6% in October, according to market expectations, from 1.5% in the preceding month. If so, this would be the highest inflation rate since October 2014. In monthly terms, the Consumer Price Index (CPI) probably rose 0.4% in October, according to the market consensus, following a 0.3% increase in the prior month. At the same time, the annualized core consumer inflation, which is stripped of prices of food and energy, probably remained stable at 2.2% in October, according to market expectations. If the general CPI approached the inflation objective, set by the Federal Reserve and considered as providing price stability, or a level below but close to 2%, this would certainly heighten the appeal of the US dollar and would mount selling pressure on dollar-priced commodities such as gold. The Bureau of Labor Statistics is to release the official CPI report at 13:30 GMT.

Additionally, market players will be paying a close attention to another set of public appearances by Fed officials. At 13:50 GMT the Fed President for New York, William Dudley, is to attend the Global Research Forum on International Macroeconomics and Finance, which will be hosted by the Federal Reserve Bank of New York.

At 15:00 GMT Federal Reserve Chair, Janet Yellen, is scheduled to testify on US economic outlook in front of the Joint Economic Committee of Congress in Washington D.C.

At 17:30 GMT Federal Reserve Governor, Lael Brainard, is to speak in New York on “The Evolution of Work and the Increase in Alternative Work Arrangements at the Forum on the Evolution of Work” sponsored by the Federal Reserve Bank of New York, Federal Reserve Board of Governors and the Freelancers Union.

At 19:45 GMT the Fed President for Chicago, Charles Evans, is to attend a conference in Chicago. Economic outlook or monetary policy-related remarks would heighten USD and gold volatility.

Meanwhile, medium-term investor rate hike expectations were unchanged at highs unseen in more than a year.

According to CME’s FedWatch Tool, as of November 16th, market players saw a 90.6% chance of a rate hike occurring at the Federal Reserve’s policy meeting in December, or unchanged compared to the prior business day, and a 91.1% chance of a hike in February 2017, also unchanged compared to 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 16th, 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 – $1,225.0
R2 – $1,226.1
R3 (Range Resistance – Sell) – $1,227.2
R4 (Long Breakout) – $1,230.6
R5 (Breakout Target 1) – $1,234.4
R6 (Breakout Target 2) – $1,236.0

S1 – $1,222.8
S2 – $1,221.7
S3 (Range Support – Buy) – $1,220.6
S4 (Short Breakout) – $1,217.2
S5 (Breakout Target 1) – $1,213.4
S6 (Breakout Target 2) – $1,211.8

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

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