Gold trading outlook: futures slide to lows unseen in almost six years ahead of the US NFP report

On Wednesday gold for delivery in February traded within the range of $1,049.60-$1,069.50. Futures closed at $1,053.20, losing 1.00% on a daily basis, or the most since November 27th, when the metal plummeted 1.36%. The daily low has been the lowest price level since February 5th 2010, when the commodity went down as low as $1,045.20.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in February were losing 0.51% on Thursday to trade at $1,048.40 per troy ounce. The precious metal slid as low as $1,045.40 earlier today, marking a new almost six-year low and overshooting the range support level (S3). The low from February 5th 2010 may act as a level of support in a shorter-term, while a break and close below it may send the commodity down for a test of $1,043.50, the low from November 2nd 2009.

Gold has marked a solid depreciation (-6.63%) in November, or the steepest since June 2013 (-12.12%), amid rising expectations of a possible rate hike by the Federal Reserve Bank at its policy meeting on December 15th-16th.

Yesterday the metal sharply lost value, after Automated Data Processing Inc. reported employers in the US non-farm private sector added more job positions in November than anticipated, 217 000 instead of 190 000. It has been the sharpest job growth since June 2015, when 237 000 positions were added. The figure for October has been revised up to a job gain of 196 000 from 182 000 reported previously. This report came as another piece of evidence that labor market conditions in the United States have recently improved and have been moving closer to the levels targeted by the Federal Reserve.

Global markets attention is now focused on the Friday government report on Non-farm Payrolls for November, which encompasses both the public and the private sectors. The median forecast by experts points to a job growth of 200 000 last month, after in October US employers added 271 000 job positions, or the most since May 2015. A better-than-expected figure would have a really strong bullish effect on the US dollar and would be a strong bearish signal for gold respectively.

Among the data string to be released on Thursday, the yellow metal may be strongly influenced by the monthly survey on the US services sector activity by the Institute for Supply Management (ISM). Overall activity probably increased at a slower pace in November compared to a month ago, according to market expectations. The corresponding non-manufacturing Purchasing Managers Index probably came in at a reading of 58.0 last month, slowing down from 59.1 in October. The latter has been the highest PMI reading since July, when a level of 60.3 was reported. If expectations were met, November would be the 71st consecutive month, when the gauge stood in the area above 50.0. In case the PMI slowed down more than projected in November, this would have a strong bearish impact on the greenback and a strong bullish effect on gold. The official reading is to be released at 15:00 GMT.

Daily and Weekly Pivot Levels

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

R1 – $1,055.02
R2 – $1,056.85
R3 (range resistance) – $1,058.67
R4 (range breakout) – $1,064.15

S1 – $1,051.38
S2 – $1,049.55
S3 (range support) – $1,047.73
S4 (range breakout) – $1,042.26

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

Central Pivot Point – $1,062.23
R1 – $1,073.37
R2 – $1,090.53
R3 – $1,101.67

S1 – $1,045.07
S2 – $1,033.93
S3 – $1,016.77