Gold trading outlook: futures retreat a second day ahead of US CPI, FOMC minutes

On Monday gold for delivery in December traded within the range of $1,080.50-$1,097.40. Futures closed at $1,083.10, shedding 0.50% on a daily basis. It has been the sharpest daily slump since November 6th, when the commodity lost 1.52%. The daily low has been an exact test of the low from August 4th.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were losing 0.42% on Tuesday to trade at $1,079.10 per troy ounce. The yellow metal went down as low as $1,076.40 earlier today, which has been the lowest level since February 11th 2010, when the commodity registered a daily low of $1,075.60.

Mondays advance has been neutralized, as the focus shifted to the key US consumer inflation report. The annualized consumer prices in the United States probably rose 0.1% in October, according to market expectations, after remaining flat in September. In monthly terms, the Consumer Price Index (CPI) probably rebounded in October, up 0.2%, following two months of decline in a row. The annualized core consumer inflation, which is stripped of prices of food and energy, probably remained steady at 1.9% in October, according to the median forecast by experts. It has been the highest annual core inflation since July 2014, when core consumer prices rose at an annual rate of 1.9%. In case a greater-than-projected acceleration in consumer prices is reported, this would have a strong bullish effect on the US dollar and a strong bearish effect on gold respectively, as it would bolster prospects of an interest rate hike in December. The CPI report is due out at 13:30 GMT.

In addition, industrial production in the United States probably expanded at a monthly rate of 0.1% in October, according to market expectations. If so, this would be the first increase in output in the past three months. In September industrial production contracted 0.2% from a month ago. Higher rates of production expansion would be bearish for gold, as it would suggest inflationary pressure build-up and, thus, another reason for the Federal Reserve to consider an increase in the target range for the federal funds rate.

The minutes from FOMC’s most recent meeting on policy, scheduled for release on Wednesday, will be of key importance this week, as the document may contain further hawkish-toned indications, which may mount additional selling pressure on gold.

Daily and Weekly Pivot Levels

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

R1 – $1,084.65
R2 – $1,086.20
R3 (range resistance) – $1,087.75
R4 (range breakout) – $1,092.40

S1 – $1,081.55
S2 – $1,080.00
S3 (range support) – $1,078.45
S4 (range breakout) – $1,073.81

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

Central Pivot Point – $1,084.50
R1 – $1,087.70
R2 – $1,094.60
R3 – $1,097.80

S1 – $1,077.60
S2 – $1,074.40
S3 – $1,067.50