Gold trading outlook: futures hover just above three-week lows before the FOMC meets to set policy

On Friday (in GMT terms) gold for delivery in December traded within the range of $1,319.00-$1,333.45. Futures closed at $1,323.10, shedding 0.56% compared to Thursday’s close. It has been the 160th drop in the past 300 trading days. In weekly terms, the yellow metal lost 0.26% of its value during the prior week. It has been the 13th drop in the past 29 weeks and also a second consecutive one. The commodity has pared its advance to 0.36% 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 December were inching up 0.03% on Monday to trade at $1,323.50 per troy ounce. The precious metal went up as high as $1,331.50 during early Asian trade, while the current daily low was at $1,321.45 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 0.06% on the day at a level of 97.35, after rising to as high as 97.62 earlier, or a level unseen since March 10th. The index has extended its gain to 1.19% so far during the current month, following a 0.33% increase in June.

The commodity has advanced 25% 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 22nd, market players saw a 15.1% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, down from 20.0% in the prior day, and a 16.9% chance of a hike in November, down from 20.7% in the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 44.6%, down from 47.1% in the preceding day. At the same time, the probability of a rate hike occurring at the Banks July 26th-27th meeting was estimated at 3.6% as of July 22nd, up from 1.2% during the prior day.

Meanwhile, silver futures for delivery in September were retreating 0.97% on the day to trade at $19.498 per troy ounce, after going down as low as $19.410 a troy ounce during the early phase of the Asian trading session, or its lowest price level since July 21st.

Daily, Weekly and Monthly Pivot Levels

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

R1 – $1,324.42
R2 – $1,325.75
R3 (Range Resistance – Sell) – $1,327.07
R4 (Long Breakout) – $1,331.05
R5 (Breakout Target 1) – $1,335.69
R6 (Breakout Target 2) – $1,337.59

S1 – $1,321.78
S2 – $1,320.45
S3 (Range Support – Buy) – $1,319.13
S4 (Short Breakout) – $1,315.15
S5 (Breakout Target 1) – $1,310.51
S6 (Breakout Target 2) – $1,308.61

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

Central Pivot Point – $1,324.47
R1 – $1,336.13
R2 – $1,349.17
R3 – $1,360.83
R4 – $1,372.50

S1 – $1,311.43
S2 – $1,299.77
S3 – $1,286.73
S4 – $1,273.70

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