Gold trading outlook: futures hold gains as FOMC minutes reveal global risk concerns, Yellen statement eyed

On Wednesday gold for delivery in June traded within the range of $1,218.60-$1,233.80. Futures closed at $1,226.70, shedding 0.46% on a daily basis. It has been the 23rd drop in the past 46 trading days. The commodity has lost 0.36% of its value so far during the current month, following three consecutive months of gains.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in June were up 0.13% on Thursday to trade at $1,228.30 per troy ounce. The precious metal went up as high as $1,233.10 during the late phase of the Asian trading session, while the current daily low was at $1,224.20 per troy ounce, recorded during early Asian trade.

Gold remained relatively steady following the release of the minutes from the Feds March 15th-16th policy meeting. The document revealed that Fed policy makers anticipated a moderate US economic growth and improving labor market indicators, in spite of the risks posed by global economic and financial developments. According to excerpts from the FOMC Minutes, released on April 6th: “…members continued to expect that, with gradual adjustments in the stance of monetary policy, economic activity would expand at a moderate pace and labor market indicators would continue to strengthen. However, they saw global economic and financial developments as continuing to pose risks. Members also continued to expect inflation to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipated and the labor market strengthened further.”

“Against the backdrop of its discussion of current conditions, the economic outlook, and the risks and uncertainties surrounding the outlook, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent at this meeting. This accommodative stance of monetary policy was expected to support further improvement in labor market conditions and a return to 2 percent inflation. One member, however, preferred to raise the target range for the federal funds rate, indicating that the current low level of real interest rates was not appropriate in the context of current economic conditions and the progress that had been achieved toward the Committees objectives.”

Market players now turn their attention to Fed Chair Janet Yellens statement, scheduled at 21:30 GMT today, as it may provide clues over how the policy tightening cycle may develop in the future. During her speech at the Economic Club of New York on March 29th Yellen used a rather dovish tone, saying that future policy adjustments need to be cautious, because of uncertainty regarding growth and inflation outlook.

Additionally, today gold trading may be influenced by the weekly report on US initial jobless claims, scheduled for release at 12:30 GMT. The number of people in the country, who filed for unemployment assistance for the first time during the business week ended on April 1st, probably decreased to 270 000, according to the median forecast by analysts, from 276 000 in the preceding week. The latter has been the highest number of claims since the business week ended on February 26th, when a revised down number of 277 000 claims was reported. In case the number of claims met expectations or fell further, this would have a moderate bullish effect on the US dollar and a moderate bearish effect on the yellow metal, respectively.

Meanwhile, silver futures for delivery in May were edging down 0.20% on the day to trade at $15.085 per troy ounce, after going down as low as $15.060 a troy ounce during the late phase of the Asian 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 – $1,226.37
R1 – $1,234.13
R2 – $1,241.57
R3 – $1,249.33

S1 – $1,218.93
S2 – $1,211.17
S3 – $1,203.73

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

Central Pivot Point – $1,225.47
R1 – $1,241.73
R2 – $1,261.27
R3 – $1,277.53

S1 – $1,205.93
S2 – $1,189.67
S3 – $1,170.13