Gold trading outlook: futures trade almost unchanged as markets await the US CPI report

On Monday gold for delivery in June traded within the range of $1,272.80-$1,287.80. Futures closed at $1,276.55, gaining 0.37% compared to Friday’s close. It has been the 39th gain in the past 74 trading days and also a second consecutive one. The daily high has been the highest price level since May 6th, when a high of $1,295.60 was recorded. In weekly terms, the yellow metal lost 1.62% of its value last week. It has been the 9th drop in the past 19 weeks and also the steepest one since the week ended on March 27th. The precious metal has gone down 1.00% so far during the current month, following four consecutive months of advance.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in June were inching down 0.08% on Tuesday to trade at $1,275.55 per troy ounce. The precious metal went up as high as $1,282.35 during mid-Asian trade, while the current daily low was at $1,274.50 per troy ounce, recorded during early Asian session.

The US Dollar Index, a gauge reflecting the relative strength of the greenback against a basket of 6 other major currencies, was edging down 0.13% on the day at a level of 94.41, after reaching 94.36 earlier, or the lowest level since last Friday. Yesterday the index dipped 0.06% on the day to close at 94.53. Weaker dollar usually favors demand for gold and other dollar-denominated commodities, as they tend to become cheaper to holders of other currencies.

Today gold trading may be strongly influenced by the key monthly report on US consumer prices. The annualized consumer inflation in the country probably accelerated to 1.1% in April, according to market expectations, from 0.9% in March. The latter has been the lowest level of consumer inflation since December 2015. In monthly terms, the Consumer Price Index (CPI) probably rose 0.3% in April, following a 0.1% uptick in the preceding month. The annualized core consumer inflation, which is stripped of prices of food and energy, probably slowed down to 2.1% in April, according to expectations, from 2.2% in March. If so, it would be the lowest core inflation since December 2015. If the general CPI tends to approach the inflation objective, set by the Federal Reserve and considered as providing price stability, or a level below but close to 2%, this will usually have a strong bullish effect on the US dollar and a strong bearish effect on gold, as it heightens the probability of monetary policy tightening. The Bureau of Labor Statistics is to release the official CPI report at 12:30 GMT.

Additionally, a separate report may show that industrial output in the United States rose at a monthly rate of 0.3% in April, according to market expectations, following a 0.6% contraction in the prior month. The latter has been the largest monthly drop since November 2015. In case the index of industrial production rebounded at a faster rate than anticipated in April, this would have a moderate bullish effect on the US dollar and a moderate bearish effect on gold. The Board of Governors of the Federal Reserve is to release the production data at 13:15 GMT.

Market players will also be paying a close attention to the remarks by several Federal Reserve representatives. At 16:00 GMT the Fed President for San Francisco and also a FOMC member, John Williams, as well as the Fed President for Atlanta, Dennis Lockhart, are expected to take a statement, while at 17:15 GMT, the Fed President for Dallas and also a FOMC member, Robert Kaplan, is expected to speak.

Meanwhile, silver futures for delivery in July were up 0.35% on the day to trade at $17.250 per troy ounce, after going up as high as $17.300 a troy ounce during the mid phase of the Asian trading session. Yesterday the commodity reached a daily high at $17.430 per troy ounce, or the highest level since May 12th.

Daily and Weekly Pivot Levels

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

Central Pivot Point – $1,279.05
R1 – $1,285.30
R2 – $1,294.05
R3 – $1,300.30

S1 – $1,270.30
S2 – $1,264.05
S3 – $1,255.30

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

Central Pivot Point – $1,272.37
R1 – $1,286.03
R2 – $1,300.17
R3 – $1,313.83

S1 – $1,258.23
S2 – $1,244.57
S3 – $1,230.43