Gold trading outlook: futures retreat for a ninth straight day on stronger US dollar

On Friday gold for delivery in August traded within the range of $1,206.40-$1,223.20. Futures closed at $1,213.80, tumbling 0.52% compared to Thursday’s close. It has been the 43rd drop in the past 83 trading days and also an eighth consecutive one. The daily low has been the lowest price level since February 22nd, when a low of $1,203.00 was registered. In weekly terms, the metal lost 3.08% of its value during the past week. It has been the 11th drop in the past 21 weeks, a third consecutive one and also the steepest one since the week ended on November 8th 2015. The precious metal has gone down 6.34% 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 August were edging down 0.50% on Monday to trade at $1,207.75 per troy ounce. The precious metal went up as high as $1,208.75 during early Asian trade, while the current daily low was at $1,199.00 per troy ounce, recorded during the late phase of the Asian trading session. The latter has been the lowest price level since February 17th, when a low of $1,196.50 was registered.

The US Dollar Index, a gauge reflecting the relative strength of the greenback against a basket of 6 other major currencies, was edging up 0.26% on the day at a level of 95.75, after reaching 95.96 earlier. The latter has been the highest level for this gauge since March 29th, when a high of 96.23 was reached. The index has increased its advance to 2.90% so far in May. Stronger dollar usually pressures demand for gold and other dollar-denominated commodities, as they tend to become more expensive to holders of other currencies.

Last Friday the dollar received a boost after during her speech at Harvard University, Fed Chair Janet Yellen noted that an increase in the target range for the federal funds rate would be appropriate during the upcoming months, in case the US economy and the labor market continued to pick up the pace. According to CME Groups FedWatch tool, there is a 28% probability that Fed policy makers will decide to hike rates at the Banks meeting in June, a 60% chance at the July meeting and a 68% chance for such a move to occur in September.

Meanwhile, silver futures for delivery in July were down 1.90% on the day to trade at $15.960 per troy ounce, after going down as low as $15.915 a troy ounce during the early phase of the Asian trading session. The latter has been the lowest price level since April 12th, when a low of $15.800 was registered.

Daily and Weekly Pivot Levels

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

Central Pivot Point – $1,214.47
R1 – $1,222.53
R2 – $1,231.27
R3 – $1,239.33

S1 – $1,205.73
S2 – $1,197.67
S3 – $1,188.93

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

Central Pivot Point – $1,223.93
R1 – $1,241.47
R2 – $1,269.13
R3 – $1,286.67

S1 – $1,196.27
S2 – $1,178.73
S3 – $1,151.07