Gold trading outlook: futures retreat from recent 4-week highs ahead of US retail sales, FOMC policy decision

On Monday gold for delivery in August traded within the range of $1,273.00-$1,287.30. Futures closed at $1,285.50, rising 0.94% compared to Friday’s close. It has been the 51st gain in the past 94 trading days and also a fourth consecutive one. The daily high has been the highest price level since May 16th, when a high of $1,287.80 was registered. The commodity has added 5.54% to its value so far during the current month, following a 5.77% slump registered in May.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in August were edging down 0.32% on Tuesday to trade at $1,281.35 per troy ounce. The precious metal went up as high as $1,286.50 during early Asian trade, while the current daily low was at $1,279.00 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 up 0.30% on the day at a level of 94.70, after reaching 94.74 earlier, or a lower-high test of June 13ths high of 94.83. The index has trimmed losses to 1.23% so far in June, after advancing 3.04% in May. 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 monthly report on US retail sales. Sales at retailers across the United States probably rose for a second straight month in May, going up at a monthly rate of 0.3%, according to the median forecast by experts, following a 1.3% surge in April. The latter has been the fastest monthly increase since March 2015, driven by sales of automobiles. US core retail sales, or retail sales ex autos, probably rose 0.4% in May compared to a month ago, following a 0.8% gain in April. If so, it would be a third consecutive month of increase. A larger-than-expected rate of growth for both indicators would have a strong bullish effect on the US dollar and a strong bearish effect on gold. The official report is due out at 12:30 GMT.

The Federal Open Market Committee is largely expected not to act on borrowing costs at the conclusion of its two-day policy meeting tomorrow. Market participants are now viewing a mere 2% probability of a rate hike occurring on June 15th, while the chance for such a scenario to develop in July was estimated at 23%, according to CME Group’s FedWatch tool. As far as the September policy meeting is concerned, the hike probability was 37%.

Gold has been supported in the past several trading days, as Brexit concerns have increased recently. The latest surveys revealed the campaign for Britain leaving the EU gained momentum.

Meanwhile, silver futures for delivery in July were losing 0.69% on the day to trade at $17.315 per troy ounce, after going down as low as $17.275 a troy ounce during the early phase of the European trading session. Yesterday the metal tested highs unseen since May 12th, as it recorded an intraday high of $17.465 per troy ounce.

Daily, Weekly and Monthly Pivot Levels

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

Central Pivot Point – $1,281.93
R1 – $1,290.87
R2 – $1,296.23
R3 – $1,305.17

S1 – $1,276.57
S2 – $1,267.63
S3 – $1,262.27

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

Central Pivot Point – $1,262.63
R1 – $1,288.77
R2 – $1,304.13
R3 – $1,330.27

S1 – $1,247.27
S2 – $1,221.13
S3 – $1,205.77

In monthly terms, for the yellow metal we have the following pivots:

Central Pivot Point – $1,239.40
R1 – $1,279.80
R2 – $1,344.80
R3 – $1,385.20

S1 – $1,174.40
S2 – $1,134.00
S3 – $1,069.00