Gold trading outlook: futures off fresh 13-month highs, as global markets digest ECB’s policy decision

On Thursday gold for delivery in April traded within the range of $1,237.50-$1,273.00. Futures closed at $1,272.00, soaring 1.23% on a daily basis. It has been the 17th gain in the past 29 trading days and also the sharpest one since March 3rd. The daily low has been the lowest level since March 2nd, when a low of $1,226.00 per troy ounce was registered. Gold has increased gains to 3.15% so far in March.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in April were edging down 0.59% on Friday to trade at $1,264.50 per troy ounce. The precious metal went up as high as $1,283.70 during the early phase of the Asian trading session, or the highest price level since February 3rd 2015 ($1,284.70), while the current daily low was at $1,263.80 per troy ounce, recorded during early European trade.

Yesterday gold fell sharply in the minutes following the European Central Banks decision on policy. The Governing Council decided to reduce the benchmark refinancing rate by 5 basis points to a fresh all-time low of 0.00%, surprising global markets, as the median forecast by analysts pointed to a rate hold. In addition, policy makers reduced the rate on the deposit facility by 10 basis points to -0.40%, in line with expectations, and the rate on the lending facility by 5 basis points to 0.25%, while the scale of monthly asset purchases was expanded by EUR 20 billion to EUR 80 billion. The asset-buying program was to run until the end of March 2017 and beyond, if macroeconomic conditions require it, until the ECB Governing Council observed a “sustained adjustment in the path of inflation consistent with its aim of achieving inflation rates below, but close to, 2% over the medium term.”

However, market sentiment suddenly shifted, after at the press conference, following the policy decision, ECB President Mario Draghi announced he did not see a need for further rate cuts. “In taking into the account the measures to grow and return to our price stability objective we do not anticipate that it will be necessary to reduce further rates,” Mario Draghi noted. “Of course new facts can change the outcome.” These remarks sent EUR/USD well above 1.1150, while gold recovered from daily lows.

Meanwhile, silver futures for delivery in March were edging down 0.51% on the day to trade at $15.535 per troy ounce, after going down as low as $15.525 a troy ounce during the early phase of the European trading session.

Daily and Weekly Pivot Levels

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

Central Pivot Point – $1,260.80
R1 – $1,284.17
R2 – $1,296.33
R3 – $1,319.67

S1 – $1,248.67
S2 – $1,225.33
S3 – $1,213.17

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

Central Pivot Point – $1,256.13
R1 – $1,293.67
R2 – $1,317.43
R3 – $1,354.97

S1 – $1,232.37
S2 – $1,194.83
S3 – $1,171.07