Gold trading outlook: futures rebound from 1-month lows ahead of October Non-Farm Payrolls report

On Wednesday gold for delivery in December traded within the range of $1,105.70-$1,121.90. Futures closed at $1,106.50, losing 0.69% on a daily basis, while marking their fifth consecutive trading day of decline. The daily low has been the lowest level since September 15th, when a low of $1,103.00 was registered.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were gaining 0.25% for the day to trade at $1,109.00 per troy ounce. The yellow metal undershot the range resistance level (R3), as it went as high as $1,110.80 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.

During her testimony in front of the House Financial Services Committee yesterday, Federal Reserve Chair Janet Yellen said the US economy was “performing well”, while an increase in the target range for the federal funds rate in December was a “live possibility”, if macroeconomic conditions remained on track.

Rate hike prospects, which tend to have a bearish impact on gold, still remain in focus, while additional clues in that direction may be provided by the official government report on US employment, scheduled for release on Friday. Employers in all sectors of the economy, with the exception of the farming industry, probably added 180 000 new job positions in October, the median forecast by experts showed. In September Payroll numbers fell to their lowest level since March 2015, as 142 000 new jobs were reported, or well below market expectations. At the same time, the rate of unemployment in the country is expected to remain steady at 5.1% for a third consecutive month in October. In case a larger-than-projected gain in employment is reported tomorrow, this would have a considerable bullish effect on the US dollar and a considerable bearish effect on gold.

Yesterday Automated Data Processing Inc (ADP) said employers in the US non-farm private sector added 182 000 jobs in October, which outpaced expectations pointing to a job gain of 180 000. It has been the lowest figure since April 2015, when private sector employment grew by 169 000. In September the number of jobs added has been revised down to 190 000 from 200 000 reported previously.

An additional bearish impulse for gold came after the Institute for Supply Management (ISM) said its Non-Manufacturing Purchasing Managers Index came in at a reading of 59.1 in October, far exceeding the median forecast by analysts. It has been the most notable surge in services sector activity since July, when the PMI climbed as high as 60.3.

Today the focus will be on the weekly report on initial jobless claims. The number of people, who filed for unemployment assistance for the first time during the business week ended on October 30th, probably increased to 264 000, according to market expectations, from 260 000 in the previous week. If so, this would be the highest number of claims since the business week ended on September 25th. The business week, which ended on October 23rd has been the 34th consecutive week, when jobless claims stood below the 300 000 threshold.

Daily and Weekly Pivot Levels

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

R1 – $1,107.99
R2 – $1,109.47
R3 (range resistance) – $1,110.96
R4 (range breakout) – $1,115.41

S1 – $1,105.02
S2 – $1,103.53
S3 (range support) – $1,102.05
S4 (range breakout) – $1,097.59

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