Gold trading outlook: futures edge down a second straight day as Fed’s Yellen provides no indication on rate hike timing

On Monday gold for delivery in August traded within the range of $1,240.00-$1,248.55. Futures closed at $1,247.35, going up 0.59% compared to Friday’s close. It has been the 47th gain in the past 89 trading days and also a second consecutive one. The commodity has added 2.49% to its value so far during the current month, following a 5.77% slump in May.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in August were edging down 0.18% on Tuesday to trade at $1,245.15 per troy ounce. The precious metal went up as high as $1,248.95 during early Asian trade, while the current daily low was at $1,244.00 per troy ounce, recorded during the early phase of the European trading 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 0.16% on the day at a level of 93.88, after reaching 93.84 earlier. On Monday it plunged to 93.74, or its lowest level since May 11th. The index has fallen 2.12% so far in June, after advancing 3.04% in May. The latter has been the strongest monthly performance since November 2015, when the dollar gauge rose 3.29%. Weaker dollar usually favors demand for gold and other dollar-denominated commodities, as they tend to become cheaper to holders of other currencies.

During her speech at the World Affairs Council of Philadelphia yesterday, Fed Chair Janet Yellen said that despite the weak job growth in all US economic segments with the exclusion of the farming industry in May, an encouraging aspect of the report was that average hourly earnings increased 2.5% over the past 12 months, or slightly outpacing performance in recent years. The latter, according to Yellen, may serve as an indication that wage growth in the country may finally be picking up. Yellen noted that the target for the federal funds rate will probably need to increase gradually over time, so that price stability and maximum sustainable employment in the longer run are ensured, but, however, she provided little or no indication over the timing for such a move.

The probability of a rate hike occurring at the FOMC policy meeting in July decreased to 27%, following Yellens statement, down from a 33% chance before the event.

Meanwhile, silver futures for delivery in July were losing 0.82% on the day to trade at $16.340 per troy ounce, after going down as low as $16.310 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 – $1,245.30
R1 – $1,250.60
R2 – $1,253.85
R3 – $1,259.15

S1 – $1,242.05
S2 – $1,236.75
S3 – $1,233.50

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

Central Pivot Point – $1,227.87
R1 – $1,256.73
R2 – $1,273.37
R3 – $1,302.23

S1 – $1,211.23
S2 – $1,182.37
S3 – $1,165.73