Gold trading outlook: futures soar to 27-month highs as the UK votes to leave the EU

On Thursday gold for delivery in August traded within the range of $1,260.00-$1,274.50. Futures closed at $1,263.10, edging down 0.54% compared to Wednesday’s close. It has been the 150th drop in the past 279 trading days and also a fifth consecutive one. The commodity has extended its advance to 8.17% 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 advancing 3.81% on Friday to trade at $1,311.20 per troy ounce. The precious metal went up as high as $1,362.45 during mid-Asian trade, or the highest price level since March 17th 2014, while the current daily low was at $1,252.95 per troy ounce, recorded during the early phase of the Asian trading session.

The US Dollar Index, a gauge reflecting the relative strength of the greenback against a basket of 6 other major currencies, was gaining 2.34% on the day at a level of 95.51, after reaching 96.70 earlier. The latter has been the highest level since March 16th. The index has trimmed losses to 0.44% so far in June, after advancing 3.04% in May.

Demand for gold and other safe-haven assets increased sharply following the shocking outcome from the UK vote on EU membership. According to Reuters, 51.9% of the British voters (17 410 742 people) supported Brexit, while 48.1% (16 141 241 respondents) voted in favor of remaining within the Euro bloc.

At the same time, British Prime Minister, David Cameron, announced its intention to step down from office by October, following the vote. Speaking outside Downing Street, Cameron said he would try to “steady the ship” in the near future. “Although leaving Europe was not the path I recommended, I am the first to praise our incredible strengths. I have said before that Britain can survive outside the European Union, and indeed that we could find a way.”, Cameron said in a statement hours ago. “Now the decision has been made to leave, we need to find the best way, and I will do everything I can to help.”

Meanwhile, the UKIP leader, Nigel Farage, said the referendum outcome was a victory for “real people”.

The Pound registered its sharpest rate of decline within a day on record, as it was losing more than 10% at one point during Friday’s Asian trading session, with GBP/USD falling to as low as 1.3231, or a level unseen since September 1985. As of the time of writing, GBP/USD managed to pare losses, trading in proximity to the 1.3900 handle. Bank of England has already stated it would take all the measures necessary to meet its responsibilities and stabilize the sterling exchange rate.

Today gold trading may be strongly influenced by the key monthly report on US durable goods orders. The value of durable goods orders in the country probably decreased 0.5% in May from a month ago, according to the median forecast by experts, following an unrevised 3.4% surge in April, or the largest one since January. The value of durable goods orders, excluding transportation, probably rose 0.2% in May from a month ago, according to expectations, following a revised up 0.5% surge in April. The latter has been the largest monthly increase since January, when core orders were up at a revised down 1.2%. In case the general index fell at a faster-than-projected pace, this would have a strong bearish effect on the US dollar and a strong bullish effect on gold, due to negative implications in regard to the wider gauge of production, factory orders. The US Census Bureau is scheduled to release the official report at 12:30 GMT.

Silver futures for delivery in July were gaining 2.55% on the day to trade at $17.795 per troy ounce, after going up as high as $18.350 a troy ounce during the mid phase of the Asian trading session. The latter has been the highest price level since January 26th 2015, when silver registered a high of $18.515 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 – $1,265.87
R1 – $1,271.73
R2 – $1,280.37
R3 – $1,286.23

S1 – $1,257.23
S2 – $1,251.37
S3 – $1,242.73

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

Central Pivot Point – $1,293.97
R1 – $1,314.93
R2 – $1,337.37
R3 – $1,358.33

S1 – $1,271.53
S2 – $1,250.57
S3 – $1,228.13

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