Gold trading outlook: futures trade close to recent lows as global markets await the FOMC rate decision

On Tuesday gold for delivery in February traded within the range of $1,059.00-$1,067.90. Futures closed at $1,060.60, falling 0.39% on a daily basis, while extending the loss from Monday. The daily low has been the lowest price level since December 4th, when the metal fell as low as $1,058.70. The commodity has dipped 0.13% so far during the current month.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in February were gaining 0.28% on Wednesday to trade at $1,064.60 per troy ounce. The precious metal went up as high as $1,065.60 earlier today, overshooting the upper range breakout level (R4). Resistance may be encountered at the hourly 100-period EMA ($1,067.30), while support may be received at December 4th low ($1,058.70) and after that – at December 3rd low ($1,046.20).

The dollar index, which tracks the relative strength of the US dollar against a basket of six other major currencies, was little changed on the day to trade at 98.22 as of 8:31 GMT. It earlier touched 98.28, which was a lower-high test of the high from Tuesday. The latter has been the highest level since December 9th.

The Federal Open Market Committee (FOMC) will probably raise its target for the federal funds rate to 0.375% from 0.250% for the first time in the past 55 policy meetings, according to the median forecast by experts. In October the Committee left borrowing costs intact, but left the door open for a hike in December, as policy makers abandoned previous warnings regarding the risks global financial and economic developments were posing to US macroeconomic environment.

The FOMC will announce its official decision on policy at 19:00 GMT. A rate hike would surely bolster demand for the US dollar and mount selling pressure on gold, as investors appetite for riskier assets would increase.

Daily and Weekly Pivot Levels

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

R1 – $1,061.42
R2 – $1,062.23
R3 (range resistance) – $1,063.05
R4 (range breakout) – $1,065.50

S1 – $1,059.78
S2 – $1,058.97
S3 (range support) – $1,058.15
S4 (range breakout) – $1,055.71

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

Central Pivot Point – $1,075.93
R1 – $1,087.47
R2 – $1,098.03
R3 – $1,109.57

S1 – $1,065.37
S2 – $1,053.83
S3 – $1,043.27