Gold trading outlook: futures gain after two days of losses on upbeat China CPI report

On Tuesday gold for delivery in February traded within the range of $1,069.60-$1,078.40. Futures closed at $1,075.50, shedding 0.08% on a daily basis and extending the loss from Monday.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in February were gaining 0.07% on Wednesday to trade at $1,076.10 per troy ounce. The precious metal went up as high as $1,077.90 earlier today, undershooting the range resistance level (R3). Resistance may be encountered at the 23.60% Fibonacci level ($1,078.82), which reflects the descent from October 28th high to December 3rd low. On the other hand, support may be received at the hourly 55-day EMA and then at the low from December 8th ($1,069.60).

Earlier on Wednesday the National Bureau of Statistics of China reported that annual consumer prices in the worlds second largest economy rose 1.5% in November, outstripping the median forecast by analysts, and also accelerating from a 1.3% growth in October. In monthly terms, consumer prices remained flat in November. The CPI data bolstered expectations in regard to future demand for the precious metal.

In addition, annual producer prices in China slumped 5.9% in November, matching expectations and the rates reported in October, September and August. November has also been the 43rd consecutive month, when the annualized Producer Price Index (PPI) registered a drop.

Gold is usually sensitive to key macroeconomic data coming out from China, as the latter is the largest producer of the commodity worldwide and also the second largest consumer.

The dollar index, which tracks the relative strength of the US dollar against a basket of six other major currencies, was losing 0.25% on the day to trade at 98.17, after dipping to as low as 98.13 earlier. It has been the lowest level since December 4th, when a low of 97.75 was registered.

Daily and Weekly Pivot Levels

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

R1 – $1,076.31
R2 – $1,077.11
R3 (range resistance) – $1,077.92
R4 (range breakout) – $1,080.34

S1 – $1,074.69
S2 – $1,073.89
S3 (range support) – $1,073.08
S4 (range breakout) – $1,070.66

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

Central Pivot Point – $1,073.17
R1 – $1,100.13
R2 – $1,115.77
R3 – $1,142.73

S1 – $1,057.53
S2 – $1,030.57
S3 – $1,014.93