Gold trading outlook: futures advance to two-week highs as the FOMC leaves target range unchanged

On Wednesday (in GMT terms) gold for delivery in December traded within the range of $1,323.0-$1,350.0. Futures closed at $1,334.5, rising 0.47% compared to Tuesday’s close. It has been the 142nd gain in the past 303 trading days and also a second consecutive one. The daily high has been the highest since July 12th. The commodity has increased its advance to 2.39% 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 advancing 1.07% on Thursday to trade at $1,348.8 per troy ounce. The precious metal went up as high as $1,350.4 during early European trade, while the current daily low was at $1,343.8 per troy ounce, recorded during the mid 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 edging down 0.35% on the day at a level of 96.41, after going down as low as 96.25 earlier. The latter has been the lowest index level since July 15th. The gauge has trimmed its advance to 0.22% so far during the current month, following a 0.33% increase in June.

Today gold trading may be influenced by the weekly report on lay-offs in the United States. The number of people in the country, who filed for unemployment assistance for the first time during the business week ended on July 22nd, probably rose to 260 000, according to market consensus, from 253 000 in the preceding week. The latter has been the lowest number of claims since the business week ended on April 15th, when a revised up 248 000 claims were reported. In case the number of claims met expectations or increased further, this would have a moderate bearish effect on the US dollar and a moderate bullish effect on gold. The US Department of Labor is to release the weekly data at 12:30 GMT.

The yellow metal rose sharply on Wednesday, following the Federal Reserves decision to keep the target range for the federal funds rate intact at 0.25%-0.50%, in line with market expectations. Policy makers noted that labor market conditions improved, while near-term risks to US growth diminished, thus, implying that a rate hike in 2016 was still a possibility.

“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data”, as noted in the FOMC Statement, released Wednesday.

According to CME’s FedWatch Tool, as of July 27th, market players saw an 18.0% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, down from 19.5% in the prior business day, and a 19.7% chance of a hike in November, down from 21.6% in the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 46.5% on July 27th, down from 51.5% in the preceding business day.

Meanwhile, silver futures for delivery in September were advancing 1.94% on the day to trade at $20.383 per troy ounce, after going up as high as $20.580 a troy ounce during the early phase of the European trading session. The latter has been the highest price level since July 11th.

Daily, Weekly and Monthly Pivot Levels

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

R1 – $1,336.98
R2 – $1,339.45
R3 (Range Resistance – Sell) – $1,341.93
R4 (Long Breakout) – $1,349.35
R5 (Breakout Target 1) – $1,358.02
R6 (Breakout Target 2) – $1,361.73

S1 – $1,332.03
S2 – $1,329.55
S3 (Range Support – Buy) – $1,327.08
S4 (Short Breakout) – $1,319.65
S5 (Breakout Target 1) – $1,310.98
S6 (Breakout Target 2) – $1,307.27

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