Gold trading outlook: futures decline a fourth straight day on Fed policy expectations

On Monday gold for delivery in December traded within the range of $1,132.60-$1,138.70. Futures closed at $1,135.80, losing 0.40% on a daily basis, while marking their third consecutive trading day of decline. The daily low has been the lowest level since October 5th, when a low of $1,132.50 was registered. In weekly terms, the commodity plummeted 1.87% last week, extending the loss from the week ended on October 25th. Last weeks rate of decline has been the sharpest one since the week ended on August 30th, when the metal posted a 2.29% slump.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were losing 0.12% for the day to trade at $1,134.50 per troy ounce. The yellow metal undershot the lower range breakout level (S4), as it went as low as $1,132.70 earlier today.

Last week 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, the Policy Statement revealed.

“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.”

“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 have a bearish impact on gold, due to investors’ greater appetite to obtain riskier assets.

Today the focus will be on the US report regarding factory orders in September. This wider indicator for production activity probably shrank for a second straight month in September, falling 0.9% on a monthly basis, according to market expectations. In August factory orders dropped 1.7%, or at the steepest monthly pace since December 2014, when the indicator posted a 3.5% slump. Excluding the sector of transportation, factory orders fell 0.8% in August compared to July, marking a second straight month of decline.

Daily and Weekly Pivot Levels

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

R1 – $1,136.36
R2 – $1,136.92
R3 (range resistance) – $1,137.48
R4 (range breakout) – $1,139.16

S1 – $1,135.24
S2 – $1,134.68
S3 (range support) – $1,134.12
S4 (range breakout) – $1,132.45

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

Central Pivot Point – $1,154.47
R1 – $1,169.73
R2 – $1,197.97
R3 – $1,213.23

S1 – $1,126.23
S2 – $1,110.97
S3 – $1,082.73