Gold trading outlook: futures still in consolidation mode ahead of key events

On Monday (in GMT terms) gold for delivery in August traded within the range of $1,352.00-$1,376.40. Futures closed at $1,355.45, inching down 0.08% compared to Friday’s close. It has been the 155th drop in the past 291 trading days and also a third consecutive one. The daily high has been the highest price level since July 6th, when a high of $1,377.45 per troy ounce was registered. The commodity has trimmed its advance to 2.95% so far during the current month, after surging 8.53% in June.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in August were inching down 0.04% on Tuesday to trade at $1,356.05 per troy ounce. The precious metal went up as high as $1,358.70 during mid-Asian trade, while the current daily low was at $1,352.50 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 shedding 0.48% on the day at a level of 96.12, after falling to as low as 96.08 earlier. Yesterday the gauge rose to 96.81, or a level unseen since June 27th. The index has erased earlier gains and is now down 0.08% so far during the current month, following a 0.33% increase in June.

After coming off recent 28-month highs, futures continued to trade within a relatively tight congestion area two days ahead of Bank of Englands keenly anticipated policy meeting, where officials may take action on the repo rate for the first time since March 2009. A potential rate cut would certainly benefit haven assets such as gold.

Today gold trading may be influenced by the statements by a number of Federal Open Market Committee members, as market participants will be searching for clues over the Feds future policy stance. At 13:15 GMT FOMC member, Daniel Tarullo, is to speak, followed by the Fed President for St. Louis, James Bullard, at 13:35 GMT and the Fed President for Minneapolis, Neel Kashkari, at 21:30 GMT.

According to CMEs FedWatch Tool, as of July 11th, market players saw an 11.9% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, up from 5.9% in the prior day, and an 11.6% chance of a hike in November, up from 5.9% in the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 32.0%, up from 23.6% in the preceding day. At the same time, the probability of a rate cut occurring in July stood at 1.2% as of July 11th, unchanged from July 8th.

Meanwhile, silver futures for delivery in September were gaining 0.75% on the day to trade at $20.457 per troy ounce, after going up as high as $20.590 a troy ounce during the early phase of the European trading session.

Daily, Weekly and Monthly Pivot Levels

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

R1 – $1,357.69
R2 – $1,359.62
R3 (Range Resistance – Sell) – $1,362.16
R4 (Long Breakout) – $1,368.87
R5 (Breakout Target 1) – $1,376.71
R6 (Breakout Target 2) – $1,379.91

S1 – $1,353.21
S2 – $1,350.98
S3 (Range Support – Buy) – $1,348.74
S4 (Short Breakout) – $1,342.03
S5 (Breakout Target 1) – $1,334.19
S6 (Breakout Target 2) – $1,330.99

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

Central Pivot Point – $1,356.35
R1 – $1,377.70
R2 – $1.398.80
R3 – $1,420.15
R4 – $1,441.50

S1 – $1,335.25
S2 – $1,313.90
S3 – $1,292.80
S4 – $1,271.70

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