Gold trading outlook: futures test highs unseen in a week as risk aversion returns to the markets

On Thursday gold for delivery in August traded within the range of $1,315.50-$1,326.45. Futures closed at $1,320.60, edging down 0.25% compared to Wednesday’s close. It has been the 152nd drop in the past 284 trading days. The commodity advanced 8.71% in June, while marking its best monthly performance since February, when the metal appreciated 10.52%.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in August were gaining 1.19% on Friday to trade at $1,336.35 per troy ounce. The precious metal went up as high as $1,340.75 during early European trade, while the current daily low was at $1,323.00 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 inching down 0.05% on the day at a level of 95.90, after climbing as high as 96.17 earlier. The index ticked up a mere 0.07% in June, following a 3.04% surge in May.

Today gold trading may be influenced by the monthly survey on business conditions in the US manufacturing sector. Activity there probably increased at a faster pace in June, with the corresponding manufacturing PMI coming in at a reading of 51.4, according to market expectations, up from 51.3 in May. If so, this would be the fourth consecutive month of expansion, which followed four successive months of contraction. Readings above the key level of 50.0 are indicative of expanding activity in the sector. In case the PMI picked up more than anticipated in June, this would have a strong bullish effect on the US Dollar and a strong bearish effect on gold. The Institute for Supply Management (ISM) is to release the official reading at 14:00 GMT.

Markets will be also paying a close attention to the statement by the Fed President for Cleveland, Loretta Mester, who is expected to speak at 15:00 GMT. Any remarks made in regard to the US macroeconomic outlook, or the Bank’s future policy stance, would certainly boost USD volatility.

On Thursday gold was supported following the remarks by Bank of England Governor, Mark Carney, outlining the possibility of additional easing, which boosted expectations that the Bank may introduce a rate cut in the coming months. Additional monetary policy accomodation usually heightens the appeal of gold.

Meanwhile, silver futures for delivery in September were gaining 3.60% on the day to trade at $19.293 per troy ounce, after going up as high as $19.480 a troy ounce during the late phase of the Asian trading session. The latter has been silvers highest price level since September 1st 2014, when a high of $19.568 a troy ounce was registered.

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 – $1,320.85
R1 – $1,326.20
R2 – $1,331.80
R3 – $1,337.15

S1 – $1,315.25
S2 – $1,309.90
S3 – $1,304.30

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

Central Pivot Point – $1,312.60
R1 – $1,372.25
R2 – $1.422.10
R3 – $1,481.75

S1 – $1,262.75
S2 – $1,203.10
S3 – $1,153.25

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

Central Pivot Point – $1,297.02
R1 – $1,386.03
R2 – $1,451.47
R3 – $1,540.48

S1 – $1,231.58
S2 – $1,142.57
S3 – $1,077.13