Gold trading outlook: futures advance to fresh 1-month highs ahead of ECB policy decision

On Wednesday gold for delivery in June traded within the range of $1,243.00-$1,256.10. Futures closed at $1,247.00, retreating 0.48% on a daily basis. It has been the 28th drop in the past 56 trading days. The daily high has been an almost exact test of the high from April 19th. The precious metal has risen 2.21% so far during the current month, following three consecutive months of advance.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in June were advancing 0.92% on Thursday to trade at $1,258.50 per troy ounce. The precious metal went up as high as $1,261.90 during the early phase of the European trading session, while the current daily low was at $1,244.50 per troy ounce, recorded during early Asian trade.

The commodity is close to overbought, as indicated by the hourly 14-period RSI and the Slow Stochastic Oscillator. Bullish momentum still remains strong. Near-term resistance may be encountered at the current daily high ($1,261.90) and then – at the high from April 12th ($1,264.60). Support may be received at the hourly 21-period Exponential Moving Average ($1,250.31), then – at the hourly 55-period EMA ($1,247.08) and finally – at the current daily low ($1,244.50).

Today market focus will be on the European Central Banks policy decision. The central bank is largely expected to leave its benchmark interest rate intact at the record low level of 0% at the conclusion of its two-day policy meeting. The bank last reduced the refinancing rate by 5 basis points to the current 0% at the March 10th 2016 meeting. The ECB will probably also leave the rate on the deposit facility intact at -0.40%. The rate was last reduced by 10 basis points to its present level at the March 10th meeting. Last month the marginal lending facility rate was cut by 5 basis points to 0.25%, while the scale of the ECB’s public and private sector asset purchasing program was expanded from EUR 60 billion to EUR 80 billion. The official decision is scheduled at 11:45 GMT, followed by the press conference with ECB President Mario Draghi at 12:30 GMT.

Meanwhile, silver futures for delivery in May were gaining 2.30% on the day to trade at $17.365 per troy ounce, after going up as high as $17.620 a troy ounce during the late phase of the Asian trading session. It has been the highest price level since May 18th 2015, when the commodity went up as high as $17.710 per troy ounce.

Daily and Weekly Pivot Levels

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

Central Pivot Point – $1,248.70
R1 – $1,254.40
R2 – $1,261.80
R3 – $1,267.50

S1 – $1,241.30
S2 – $1,235.60
S3 – $1,228.20

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

Central Pivot Point – $1,239.77
R1 – $1,255.03
R2 – $1,276.97
R3 – $1,292.23

S1 – $1,217.83
S2 – $1,202.57
S3 – $1,180.63