Gold trading outlook: futures advance after a dovish FOMC Minutes

On Thursday gold for delivery in December traded within the range of $1,138.70-$1,146.70. Futures closed at $1,144.70, down 0.37% on a daily basis. It has been the first drop in the past five trading days.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were gaining 0.63% for the day to trade at $1,151.50 per troy ounce. The yellow metal overcame the upper range breakout level (R4), as it went up as high as $1,154.00 earlier today. It has been the highest level since September 24th, when a daily high of $1,155.90 was reached. The latter may serve as a potential level of resistance for the commodity. A break above it may drive the precious metal up for a test of the weekly R2 level at $1.163.43.

FOMC Minutes reveal concerns over global economic conditions

The Minutes from the Federal Open Market Committee’s September policy meeting showed officials were concerned that recent global macroeconomic conditions may curb economic activity in the United States.

According to excerpts from the Minutes: “In their discussion of monetary policy for the period ahead, members judged that information received since the FOMC met in July indicated that economic activity was expanding at a moderate pace. Although net exports remained soft, economic growth was broadly based. Members noted that recent global and financial market developments might restrain economic activity somewhat as a result of the higher level of the dollar and possible effects of slower economic growth in China and in a number of emerging market and commodity-producing economies.”

“In assessing whether economic conditions had improved sufficiently to initiate a firming in the stance of policy, many members said that the improvement in labor market conditions met or would soon meet one of the Committee’s criteria for beginning policy normalization. But some indicated that their confidence that inflation would gradually return to the Committee’s 2 percent objective over the medium term had not increased, in large part because recent global economic and financial developments had imparted some restraint to the economic outlook and placed further downward pressure on inflation in the near term.”

“The Committee agreed to maintain the target range for the federal funds rate at 0 to 1/4 percent and to reaffirm in its postmeeting statement that the Committee’s decision about how long to maintain the current target range for the federal funds rate would depend on its assessment of actual and expected progress toward its objectives of maximum employment and 2 percent inflation.”

The tone of the September minutes may add to prospects that the Federal Reserve would rather delay a hike in borrowing costs until March 2016. Recently it has been widely speculated that the Bank may raise the target range as soon as December this year. The yellow metal tends to appreciate in value in times of economic uncertainty and risk aversion in general.

Daily and Weekly Pivot Levels

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

R1 – $1,145.43
R2 – $1,146.17
R3 (range resistance) – $1,146.90
R4 (range breakout) – $1,149.10

S1 – $1,143.97
S2 – $1,143.23
S3 (range support) – $1,142.50
S4 (range breakout) – $1,140.30

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

Central Pivot Point – $1,128.03
R1 – $1,150.27
R2 – $1,163.43
R3 – $1,185.67

S1 – $1,114.87
S2 – $1,092.63
S3 – $1,079.47