Gold trading outlook: futures edge up after fresh three-month low

Gold climbed up for the first time in nine sessions on Thursday to trade above a fresh three-month low as a robust dollar and increasing speculations about a sooner boost of U.S. interest rates dented demand for the precious metal.

Comex gold for delivery in April was up 1.02% at $1 162.3 per troy ounce at 7:57 GMT, shifting in a daily range of $1 165.7 and $1 149.1. The precious metal dropped 0.82% on Wednesday to $1 150.6, having previously fallen to its lowest since December 1st at $1 146.5.

The precious metal took a huge hit last Friday when the Labor Department released non-farm payrolls data that was above projections and also marked the 12th month of job increases above 200 000. The upbeat numbers bolstered expectations that the Federal Reserves first rate hike since 2006 is nearing.

Previously Fed officials were expected to lift borrowing costs by the middle of the year, but concerns arose after Fed Chair Janet Yellen indicated that a rate hike during the next couple of policy meetings is unlikely.

Last month, Ms. Yellen outlined in her semi-annual testimony that officials would look to drop their current “patient” stance on the matter before actually initiating the rate hike. With the dollar reaching new highs, strength in the labor market and several policy makers backing a sooner increase in rates, the Fed may drop the “patient” approach as soon as their next two-day meeting scheduled on March 17-18.

Earlier this week Dallas Fed President Richard Fisher spoke in favor of a rate hike and even warned that an eventual delay could expose the largest economy in the world to a risk of recession. Additional hints from Fed members are not expected until after the meeting as the officials enter a preparation period, during which they make no public comments regarding the economy and policy.

The only thing that seems to stand in the hikes way is the lower inflation. The Feds preferred metric remains below the targeted 2%, pressured by the plunge of oil prices and Ms. Yellen has previously said that she wants to be “reasonably confident” that inflation is likely to reach its desired level before launching the increase in borrowing costs.

Many analysts and investors are expecting the Federal Reserve to boost rates either in June or September. An eventual increase would dent demand for all non-interest-bearing assets, including gold, while also boosting the already robust dollar.

The U.S. dollar index for settlement in March traded 0.71% lower at 99.080 at 8:00 GMT, shifting in a daily range of 99.060 and 100.065, its highest since April 2003. The U.S. currency gauge gained 1.19% on Wednesday to 99.785.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, remained unchanged on Wednesday at 753.04 tons, their lowest in more than a month.

“When we saw the strong jobs number, and certainly that it was above consensus, the dollar just went crazy and that really let go on the gold price,” David Lennox, a resource analyst at Fat Prophets in Sydney, cited by Bloomberg.

Pivot Points

According to Binary Tribune’s daily analysis, April gold’s central pivot point on the Comex stands at $1 153.8. If the contract breaks its first resistance level at $1 161.1, next barrier will be at $1 171.6. In case the second key resistance is broken, the precious metal may attempt to advance to $1 178.9.

If the contract manages to breach the S1 level at $1 143.3, it will next see support at $1 136.0. With this second key support broken, movement to the downside may extend to $1 125.5.