Gold trading outlook: futures distance from 22-month highs as market players take profits

On Thursday gold for delivery in August traded within the range of $1,280.50-$1,316.40. Futures closed at $1,284.50, edging down 0.10% compared to Wednesday’s close. It has been the 44th drop in the past 97 trading days. The daily high has been the highest price level since August 14th 2014, when a high of $1,316.40 was registered as well. The commodity has trimmed its advance to 5.98% 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 up 0.21% on Friday to trade at $1,287.20 per troy ounce. The precious metal went up as high as $1,288.95 during early Asian trade, while the current daily low was at $1,279.50 per troy ounce, recorded during the early phase of the Asian trading session as well.

The US Dollar Index, a gauge reflecting the relative strength of the greenback against a basket of 6 other major currencies, was edging down 0.27% on the day at a level of 94.51, after reaching 94.47 earlier. The index has pared losses to 1.41% 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 influenced by the monthly report on housing starts and building permits in the United States. The number of housing starts in the United States probably fell 1.9% to 1.150 million units in May, according to market expectations, from the seasonally adjusted annual rate of 1.172 million during the prior month. The latter has been the highest number of starts since February, when a revised up level of 1.194 million was reported. At the same time, the number of building permits in the country probably went up 3% to 1.150 million in May from an annual level of 1.116 million in April. If expectations were met, this would be the highest level since February, when the revised up 1.177 million units were reported. In case a higher-than-anticipated figure was reported, this would have a moderate bullish effect on the US dollar. The official housing data are due out at 12:30 GMT.

Earlier this week the yellow metal received a strong boost and managed to surpass the $1,300 price level, after the Federal Open Market Committee kept the target range for the federal funds rate on hold at 0.25%-0.50% for a fourth time this year, as largely expected. Additionally, Fed officials trimmed their US GDP growth forecasts. US economy is now expected to grow 2% in 2016, down from 2.2% as expected in March, and by another 2% in 2017, down from 2.1% in the previous forecast. On the other hand, PCE inflation forecast was revised up to 1.4% in 2016 (from 1.2% as expected in March), while the 2017 forecast was left unchanged at 1.9%.

Meanwhile, silver futures for delivery in July were advancing 0.64% on the day to trade at $17.395 per troy ounce, after going up as high as $17.430 a troy ounce during the early phase of the European trading session. Yesterday the commodity tested highs unseen since May 2nd, as it went up as high as $17.880 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 – $1,293.80
R1 – $1,307.10
R2 – $1,329.70
R3 – $1,343.00

S1 – $1,271.20
S2 – $1,257.90
S3 – $1,235.30

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