Gold trading outlook: futures rebound as the FOMC Minutes mount pressure on the greenback

On Wednesday (in GMT terms) gold for delivery in December traded within the range of $1,340.5-$1,356.8. Futures closed at $1,348.8, retreating 0.60% compared to Tuesday’s close. It has been the 167th drop in the past 318 trading days and also the sharpest daily slump since August 5th. The daily low has been a level unseen since August 12th, when a low of $1,338.3 per troy ounce was registered. The precious metal has increased its slump to 0.64% 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 edging up 0.34% on Thursday to trade at $1,353.4 per troy ounce. The precious metal went up as high as $1,361.5 during early Asian trade, while the current daily low was at $1,352.8 per troy ounce, recorded during the mid phase of the European 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 0.29% on the day at a level of 94.42, after going down as low as 94.31 earlier. The latter has been the weakest level since June 24th. The gauge has increased its slump to 1.11% so far during the current month, following a 0.74% retreat in July.

The Minutes from the FOMCs policy meeting in July, released Wednesday, revealed that policy makers left the door open for a hike by the end of 2016, depending on incoming macroeconomic data. According to excerpts from the document: “While members judged that near-term risks to the domestic outlook had diminished, some noted that the U.K. vote, along with other developments abroad, still imparted significant uncertainty to the medium- to longer-term outlook for foreign economies, with possible consequences for the U.S. outlook.”

“Members generally agreed that, before taking another step in removing monetary accommodation, it was prudent to accumulate more data in order to gauge the underlying momentum in the labor market and economic activity. A couple of members preferred also to wait for more evidence that inflation would rise to 2 percent on a sustained basis.”

“…members emphasized that the actual path of the federal funds rate would depend on the economic outlook as informed by incoming data. In that regard, members judged it appropriate to continue to leave their policy options open and maintain the flexibility to adjust the stance of policy based on incoming information and its implications for the Committees assessment of the outlook for economic activity, the labor market, and inflation, as well as the risks to the outlook.”

Today gold trading may be influenced by the weekly report on lay-offs in the United States. The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on August 12th, probably fell to 265 000, according to market consensus, from 266 000 in the preceding week. In case the number of claims met expectations or decreased further, this would have a moderate bullish effect on the US dollar and a moderate bearish effect on gold. The US Department of Labor is to release the official report at 12:30 GMT.

Additionally, market players will be paying a close attention to the public appearances by several members of the Federal Open Market Committee. At 14:05 GMT the Fed President for New York, William Dudley, is expected to take a statement, followed by the Fed President for San Francisco, John Williams, at 20:00 GMT.

On Tuesday, in a speech, Feds Dudley hinted that a hike as soon as September was possible, while the Federal Reserve President for Atlanta, Dennis Lockhart, said that a two-rate-hike scenario this year was a possibility.

According to Investing.com’s Fed Rate Monitor Tool, as of August 17th, 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 13.8% chance of a hike in November, up from 12.8% during the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 46.7% on August 17th, up from 46.0% 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 inching down 0.03% on the day to trade at $19.642 per troy ounce, after going down as low as $19.633 a troy ounce during the mid phase of the European trading session. Yesterday silver fell to as low as $19.375 per troy ounce, which has been the lowest price level for this commodity since July 25th, when a low of $19.355 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 – $1,350.3
R2 – $1,351.8
R3 (Range Resistance – Sell) – $1,353.3
R4 (Long Breakout) – $1,357.8
R5 (Breakout Target 1) – $1,363.0
R6 (Breakout Target 2) – $1,365.2

S1 – $1,347.3
S2 – $1,345.8
S3 (Range Support – Buy) – $1,344.3
S4 (Short Breakout) – $1,339.8
S5 (Breakout Target 1) – $1,334.6
S6 (Breakout Target 2) – $1,332.4

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