Gold trading outlook: futures retreat a second day ahead of the US macroeconomic data string

On Thursday (in GMT terms) gold for delivery in December traded within the range of $1,341.4-$1,359.4. Futures closed at $1,350.0, edging down 0.14% compared to Wednesday’s close. It has been the 165th drop in the past 314 trading days. The commodity has increased its slump to 0.55% so far in August, after surging 2.86% in July.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were losing 0.62% on Friday to trade at $1,341.6 per troy ounce. The precious metal went up as high as $1,346.8 during mid-Asian trade, while the current daily low was at $1,340.4 per troy ounce, recorded during the early phase of the Asian trading session. The latter has been the lowest price level since August 9th.

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 95.84, after going down as low as 95.77 earlier. The gauge has pared its advance to 0.37% so far during the current month, following a 0.74% retreat in July.

Today gold trading may be strongly influenced by the monthly report on retail sales in the United States. Sales at retailers in the country probably rose for a fourth straight month in July, going up at a monthly rate of 0.4%, according to the median forecast by experts, following a 0.6% surge in June. US core retail sales, or retail sales ex autos, probably rose 0.2% in July compared to a month ago, according to expectations, following another 0.7% gain in June. If so, it would be a fifth consecutive month of increase. In case the general index of sales rose at a slower rate than anticipated in July, this would have a strong bearish effect on the US dollar and a strong bullish effect on gold. The official report by the US Census Bureau is due out at 12:30 GMT.

Additionally, the monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States improved in August. The preliminary reading of the corresponding index, which usually comes out two weeks ahead of the final data, probably rose to a reading of 91.5 during the current month from a final 90.0 in July. The latter came above the preliminary reading of 89.5, which was reported on July 15th. In case the gauge of consumer sentiment met or even exceeded expectations in August, this would have a moderate-to-strong bullish effect on the US Dollar and a moderate-to-strong bearish effect on gold. The preliminary reading is due out at 14:00 GMT.

These data points will be closely watched by market players for clues whether US macroeconomic conditions may warrant an early rate hike by the Federal Reserve this year.

According to CME’s FedWatch Tool, as of August 11th, market players saw a 12.0% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, up from 9.0% in the prior business day, and a 15.6% chance of a hike in November, up from 9.0% during the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 51.9% on August 11th, up from 39.4% in the preceding business day. A prolonged low-rate environment tends to support demand for haven assets such as gold.

Meanwhile, silver futures for delivery in September were retreating 0.94% on the day to trade at $19.832 per troy ounce, after going down as low as $19.765 a troy ounce during the early phase of the European trading session. The latter has been the lowest level for this commodity since August 9th, when a daily low of $19.605 per troy ounce was recorded.

Daily, Weekly and Monthly Pivot Levels

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

R1 – $1,351.7
R2 – $1,353.3
R3 (Range Resistance – Sell) – $1,355.0
R4 (Long Breakout) – $1,359.9
R5 (Breakout Target 1) – $1,365.7
R6 (Breakout Target 2) – $1,368.1

S1 – $1,348.4
S2 – $1,346.7
S3 (Range Support – Buy) – $1,345.1
S4 (Short Breakout) – $1,340.1
S5 (Breakout Target 1) – $1,334.3
S6 (Breakout Target 2) – $1,331.9

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

Central Pivot Point – $1,353.0
R1 – $1,365.6
R2 – $1,386.8
R3 – $1,399.4
R4 – $1,412.0

S1 – $1,331.8
S2 – $1,319.2
S3 – $1,298.0
S4 – $1,276.8

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

Central Pivot Point – $1,348.5
R1 – $1,386.5
R2 – $1,415.4
R3 – $1,453.4
R4 – $1,491.4

S1 – $1,319.5
S2 – $1,281.5
S3 – $1,252.6
S4 – $1,223.6