Gold trading outlook: futures trim gains from Friday as the military coup in Turkey fails

On Friday (in GMT terms) gold for delivery in August traded within the range of $1,322.50-$1,339.35. Futures closed at $1,327.40, shedding 0.29% compared to Thursday’s close. It has been the 158th drop in the past 295 trading days and also a second consecutive one. In weekly terms, the yellow metal lost 2.22% of its value during the past week. It has been the 12th drop in the past 28 weeks. The commodity has pared its advance to 0.80% so far during the current month, after surging 8.53% in June.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in August were inching up 0.09% on Monday to trade at $1,328.55 per troy ounce. The precious metal went up as high as $1,334.95 during early Asian trade, while the current daily low was at $1,324.00 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 inching down 0.05% on the day at a level of 96.65, after falling to as low as 96.46 earlier. The index has erased earlier losses and is now up 0.49% so far during the current month, following a 0.33% increase in June.

Gold rose sharply in late US trade on Friday, following news of an attempted military coup in Turkey, aimed to topple the countrys President, Recep Tayyip Erdogan. During the weekend it became clear that 6 000 suspected supporters of the coup were rounded up. As it was not a successful act, demand for safe haven assets such as gold seemed to have faded on Monday.

The commodity has advanced 25.3% since the beginning of the year on the back of mounting expectations of further monetary policy accommodation by central banks worldwide in order to curb negative effects from the EU membership referendum last month. At the same time, Federal Reserves decision to hike borrowing costs further may be pushed back to the Banks policy meeting in December.

According to CME’s FedWatch Tool, as of July 15th, market players saw a 13.0% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, up from 12.0% in the prior day, and a 14.8% chance of a hike in November, up from 12.0% in the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 43.2%, up from 37.1% in the preceding day. At the same time, the probability of a rate cut occurring in July was estimated at 0% as of July 15th.

Meanwhile, silver futures for delivery in September were retreating 1.40% on the day to trade at $19.883 per troy ounce, after going down as low as $19.860 a troy ounce during the early phase of the European trading session, or its lowest price level since July 8th.

Daily, Weekly and Monthly Pivot Levels

By employing the Camarilla calculation method, the daily levels of importance for gold are presented as follows:

R1 – $1,340.97
R2 – $1,361.49
R3 (Range Resistance – Sell) – $1,332.03
R4 (Long Breakout) – $1,336.67
R5 (Breakout Target 1) – $1,342.08
R6 (Breakout Target 2) – $1,344.31

S1 – $1,325.86
S2 – $1,324.31
S3 (Range Support – Buy) – $1,322.77
S4 (Short Breakout) – $1,318.13
S5 (Breakout Target 1) – $1,312.72
S6 (Breakout Target 2) – $1,310.49

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

Central Pivot Point – $1,340.97
R1 – $1,361.93
R2 – $1.397.37
R3 – $1,418.33
R4 – $1,439.30

S1 – $1,305.53
S2 – $1,284.57
S3 – $1,249.13
S4 – $1,213.70

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

Central Pivot Point – $1,293.13
R1 – $1,380.87
R2 – $1,443.33
R3 – $1,531.07
R4 – $1,618.80

S1 – $1,230.67
S2 – $1,142.93
S3 – $1,080.47
S4 – $1,018.00