Gold trading outlook: futures advance a second day ahead of the key US CPI report, Fed speakers

On Monday (in GMT terms) gold for delivery in December traded within the range of $1,340.9-$1,349.1. Futures closed at $1,347.5, edging up 0.32% compared to Friday’s close. It has been the 150th gain in the past 316 trading days. The precious metal has pared its slump to 0.74% 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 advancing 0.61% on Tuesday to trade at $1,355.7 per troy ounce. The precious metal went up as high as $1,357.4 during early European trade, while the current daily low was at $1,344.8 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 losing 0.72% on the day at a level of 94.89, after going down as low as 94.83 earlier. The latter has been the lowest level for this index since June 24th (93.73). The gauge has neutralized its earlier advance and is now down 0.60% so far during the current month, following a 0.74% retreat in July.

Today gold trading may be strongly influenced by the key monthly report on consumer prices in the United States. The annualized consumer inflation in the United States probably decelerated to 0.9% in July, according to market expectations, from 1.0% in the preceding two months. If so, this would be the lowest annual inflation since March. In monthly terms, the Consumer Price Index (CPI) probably rose for a fifth consecutive month in July, going up 0.1%, according to the market consensus, following a 0.2% surge in the prior month. On the other hand, the annualized core consumer inflation, which is stripped of prices of food and energy, probably remained stable at 2.3% in July, according to market expectations. It has been the highest annual core inflation since February. If the general CPI tends to distance from the inflation objective, set by the Federal Reserve and considered as providing price stability, or a level below but close to 2%, this will usually reduce the appeal of the US dollar and support gold, as it lowers the probability of a rate hike. The Bureau of Labor Statistics is to release the official CPI report at 12:30 GMT.

A separate report may reveal that industrial output in the United States probably rose for a second straight month in July, going up at a rate of 0.3%, according to market expectations. In June the index of production surged at a monthly rate of 0.6%, or the fastest since July 2015. A larger-than-projected monthly increase in the index would usually have a moderate bullish effect on the US dollar and a moderate bearish effect on gold. The Board of Governors of the Federal Reserve is to release the official production data at 13:15 GMT.

Market players will be also paying a close attention to the public appearances by several members of the Federal Open Market Committee. At 16:30 GMT the Fed President for Atlanta, Dennis Lockhart, is expected to take a statement, followed by the Fed President for St. Louis, James Bullard, at 17:00 GMT.

Gold futures rose for a second straight trading day on Tuesday, as investors cut their bets on an early hike by the Fed this year.

According to CME’s FedWatch Tool, as of August 15th, market players saw a 9.0% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, unchanged compared to the prior business day, and a 12.8% chance of a hike in November, up from 10.9% during the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 41.9% on August 15th, down from 44.9% 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 gaining 0.87% on the day to trade at $20.023 per troy ounce, after going up as high as $20.070 a troy ounce during the early phase of the European trading session.

Daily, Weekly and Monthly Pivot Levels

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

R1 – $1,348.3
R2 – $1,349.0
R3 (Range Resistance – Sell) – $1,349.8
R4 (Long Breakout) – $1,352.0
R5 (Breakout Target 1) – $1,354.6
R6 (Breakout Target 2) – $1,355.7

S1 – $1,346.7
S2 – $1,346.0
S3 (Range Support – Buy) – $1,345.2
S4 (Short Breakout) – $1,343.0
S5 (Breakout Target 1) – $1,340.4
S6 (Breakout Target 2) – $1,339.3

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

Central Pivot Point – $1,347.4
R1 – $1,359.4
R2 – $1,375.7
R3 – $1,387.7
R4 – $1,399.8

S1 – $1,331.1
S2 – $1,319.1
S3 – $1,302.8
S4 – $1,286.6

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