Gold trading outlook: futures lose ground as Fed officials leave the door open for a hike

On Wednesday gold for delivery in December traded within the range of $1,152.20-$1,183.10. Futures closed at $1,155.80, plunging 0.94% on a daily basis, while marking the sharpest decrease since September 30th, when they slumped 1.03%. The daily low has been the lowest level since October 9th, when a low of $1,151.60 was registered.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were losing 1.35% for the day to trade at $1,160.20 per troy ounce. The yellow metal overcame the weekly S1 level, as it went as low as $1,155.00 earlier today.

The commodity erased gains it achieved earlier on Wednesday, as the Federal Reserve left the door open for a hike at the final policy meeting in December, citing sound gains in US household spending and investment. In addition, policymakers dropped prior warnings in regard to the risks global financial and economic developments were posing to economic activity in the United States.

According to excerpts from the FOMC Statement released yesterday: “The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring global economic and financial developments. Inflation is anticipated to remain near its recent low level in the near term but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate.”

“In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.”

Rate hike prospects tend to mount selling pressure on gold, due to investors greater appetite for risk.

Today the focus will be on the key report on US preliminary Gross Domestic Product regarding the third quarter of the year. The preliminary estimate of the US Gross Domestic Product probably pointed to an annualized rate of growth of 1.6% in Q3, according to expectations. The final GDP estimate for the second quarter, reported on September 25th, pointed to an annual growth of 3.9%, a revision up compared to the preliminary and the second GDP estimates. It has also been the fastest annual rate of growth since Q3 2014, when US economy expanded at a final rate of 5.0%. In case a slower-than-projected rate of growth is reported in Q3, this would have a substantial bearish effect on the US dollar and would boost demand for gold. The preliminary GDP report is due out at 12:30 GMT.

Daily and Weekly Pivot Levels

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

R1 – $1,158.63
R2 – $1,161.47
R3 (range resistance) – $1,164.30
R4 (range breakout) – $1,172.80

S1 – $1,152.97
S2 – $1,150.14
S3 (range support) – $1,147.30
S4 (range breakout) – $1,138.81

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

Central Pivot Point – $1,168.57
R1 – $1,173.83
R2 – $1,184.37
R3 – $1,189.63

S1 – $1,158.03
S2 – $1,152.77
S3 – $1,142.23