Gold trading outlook: futures rebound after a seven-day string of losses on China concerns

On Friday gold for delivery in December traded within the range of $1,084.80-$1,109.50. Futures closed at $1,087.60, losing 1.52% on a daily basis, or the most since November 3rd, while marking their seventh consecutive trading day of decline. The daily low has been the lowest price level since August 7th, when gold went down as low as $1,081.70. In weekly terms, the commodity lost 4.72% of its value last week, which has been the most considerable drop rate since the week ended on November 2nd 2014, when gold plunged 4.88%.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were gaining 0.37% for the day to trade at $1,091.70 per troy ounce. The yellow metal went up as high as $1,094.00 earlier today, while undershooting the range resistance level (R3).

The precious metal saw heavy selling pressure on Friday, after the Bureau of Labor Statistics said US employers in all sectors of the economy with the exception of the farming industry added 271 000 jobs in October, a figure far beyond what analysts had projected. It has been the most considerable gain in jobs since December 2014, when 329 000 job positions were added. September’s figure has been revised down to 137 000 from a job gain of 142 000 reported previously. At the same time, the rate of unemployment fell 0.1% to reach 5.0% in October, or the lowest level since April 2008. The strong employment numbers may bolster the view that the Federal Reserve Bank will take action and hike borrowing costs at its final meeting for the year on December 15th-16th.

Rate hike prospects tend to have a strong bearish effect on gold, due to increased appetite for higher-yielding assets.

During her testimony in front of the House Financial Services Committee last week, 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.

A series of key US macroeconomic data, which may provide additional clues over the possibility of a hike, is to be released on Friday.

Meanwhile, earlier today gold futures received a boost, following soft trade data from China. The surplus on the Chinese balance of trade expanded at a lesser pace than anticipated in October, an official government report revealed. A figure of USD 61.64 billion was reported compared to expectations pointing to a USD 64.75 billion surplus. At the same time, Chinese exports were reported to have shrunk at an annualized rate of 6.9% in October, or considerably more than what the median estimate by analysts showed. October has been the fourth consecutive month, during which annual exports fell. The nations imports shrank for a 12th straight month in October, going down 18.8% year-on-year, which added to concerns over the strength of domestic demand and overall economic recovery. The median forecast by experts pointed to a 16.0% decline in October imports.

Daily and Weekly Pivot Levels

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

R1 – $1,089.86
R2 – $1,092.13
R3 (range resistance) – $1,094.39
R4 (range breakout) – $1,101.19

S1 – $1,085.34
S2 – $1,083.07
S3 (range support) – $1,080.81
S4 (range breakout) – $1,074.02

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

Central Pivot Point – $1,103.70
R1 – $1,122.60
R2 – $1,157.60
R3 – $1,176.50

S1 – $1,068.70
S2 – $1,049.80
S3 – $1,014.80