Gold trading outlook: futures come off 27-month highs ahead of the official US employment report

On Thursday (in GMT terms) gold for delivery in August traded within the range of $1,352.00-$1,372.50. Futures closed at $1,362.10, edging down 0.21% compared to Wednesday’s close. It has been the 153rd drop in the past 289 trading days. The commodity has pared its advance to 2.96% so far during the current month, after advancing 8.53% in June.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in August were edging down 0.34% on Friday to trade at $1,357.50 per troy ounce. The precious metal went up as high as $1,363.45 during early Asian trade, while the current daily low was at $1,355.50 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 edging down 0.11% on the day at a level of 96.22, after slipping as low as 96.08 earlier. The index has inched up 0.04% so far during the current month, following a 0.33% gain in June.

Today gold trading may be strongly influenced by the monthly government report on US non-farm employment growth. Employers in all sectors of economy in the United States, excluding the farming industry, probably added 175 000 new jobs in June, according to the median forecast by experts, after a job gain of 38 000 in May. The latter has been the slowest growth rate since May 2011, when a revised down figure of 25 000 was reported.

Average Hourly Earnings probably increased 0.2% in June compared to the prior month, according to market expectations, following another 0.2% gain to USD 25.59 in May. If expectations were met, June would be the fourth consecutive month of earnings increase.

Meanwhile, the rate of unemployment in the country probably increased to 4.8% in June, according to market expectations, from 4.7% in May. The latter has been the lowest rate of unemployment since November 2007.

In case the unemployment rate met expectations or even rose further, while non-farm employment grew at a lesser rate than projected in June, this would have a strong bearish effect on the US Dollar and a strong bullish effect on gold. The Bureau of Labor Statistics will release the official report at 12:30 GMT.

Weaker numbers would certainly urge the Federal Reserve to abstain from hiking rates in the upcoming months. The Minutes from the Federal Open Market Committee’s June 14th-15th meeting, released two days ago, revealed that policy makers agreed to wait for further labor market data and the possible effects from the UK’s vote on EU membership on global markets before taking action on borrowing costs.

Meanwhile, silver futures for delivery in September were retreating 0.51% on the day to trade at $19.737 per troy ounce, after going down as low as $19.648 a troy ounce during the early phase of the European trading session.

Daily, Weekly and Monthly Pivot Levels

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

Central Pivot Point – $1,362.20
R1 – $1,372.40
R2 – $1,382.70
R3 – $1,392.90
R4 – $1,403.10

S1 – $1,351.90
S2 – $1,341.70
S3 – $1,331.40
S4 – $1,321.10

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

Central Pivot Point – $1,330.83
R1 – $1,350.07
R2 – $1.363.43
R3 – $1,382.67
R4 – $1,401.90

S1 – $1,317.47
S2 – $1,298.23
S3 – $1,284.87
S4 – $1,271.50

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

Central Pivot Point – $1,293.13
R1 – $1,380.87
R2 – $1,443.33
R3 – $1,531.07
R4 – $1,618.80

S1 – $1,230.67
S2 – $1,142.93
S3 – $1,080.47
S4 – $1,018.00