Gold trading outlook: futures neutralize Asian session gains as markets focus on US employment numbers

On Thursday (in GMT terms) gold for delivery in December traded within the range of $1,305.5-$1,318.6. Futures closed at $1,317.1, edging up 0.43% compared to Wednesday’s close. It has been the 156th gain in the past 329 trading days. The daily low has been a level unseen since June 24th, when a low of $1,253.7 was recorded. The precious metal has gained 0.43% so far during the current month, after losing 3.40% of its value in August.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were edging down 0.14% on Friday to trade at $1,315.2 per troy ounce. The precious metal went up as high as $1,319.8 during early Asian trade, while the current daily low was at $1,313.2 per troy ounce, recorded during the early 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 up 0.16% on the day at a level of 95.81, after going up as high as 95.85 earlier. The gauge has dipped 0.21% so far in September, following a 0.54% advance in August.

Yesterday gold distanced from two-month lows on the back of weaker US Dollar, after the Institute for Supply Management reported that US manufacturing activity shrank in August. The corresponding Purchasing Managers Index tumbled to a reading of 49.4 last month, or far more than what analysts had projected, after being at 52.6 in July. It has been the lowest PMI level in 7 months, as the gauges of new orders and production fell below the key 50.0 level, while the sub-index of employment conditions plunged further into the contraction area.

Today gold trading may be strongly influenced by the monthly report on US Non-farm Payrolls. Employers in all sectors of economy, excluding the farming industry, probably added 180 000 new jobs in August, according to the median forecast by experts, after a job gain of 255 000 in July. June’s figure has been revised up to 292 000 from 287 000 reported previously. Meanwhile, the rate of unemployment in the country probably decreased to 4.8% in August, according to market expectations, from 4.9% in June and July. In case of a higher-than-expected gain in jobs and a lower-than-expected rate of unemployment in August, demand for the US dollar would be strongly supported, while this would weigh on gold prices. The Bureau of Labor Statistics will release the official employment data at 12:30 GMT.

A separate report by the US Census Bureau may show that the total value of factory orders in the country probably rebounded in July after two months of decline, going up at a monthly rate of 2.0%, according to the median estimate by experts. If so, this would be the largest monthly increase since June 2015, when a revised up 2.2% growth was recorded. In June, there has been an unrevised 1.5% drop mainly due to weak demand for transportation equipment and capital goods. In case the general index of new orders surged at a faster-than-anticipated rate in July, this would trigger a moderate bullish impulse for the US dollar and would be a bearish signal for gold, as it implies future growth acceleration. The official report is due out at 14:00 GMT.

Market players will be also paying a close attention to a statement, offered by the Fed President for Richmond and also a member to the Federal Open Market Committee, Jeffrey Lacker, at 17:00 GMT. Any remarks in regard to the central bank’s policy stance or the US economic outlook would heighten gold volatility.

According to CME’s FedWatch Tool, as of September 1st, market players saw a 24.0% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, or unchanged compared to the prior two business days, and a 30.3% chance of a hike in November, again unchanged compared to the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 53.6% on September 1st, or the same as expected in the preceding business day.

Meanwhile, silver futures for delivery in December were edging down 0.16% on the day to trade at $18.913 per troy ounce, after going down as low as $18.895 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 – $1,318.3
R2 – $1,319.5
R3 (Range Resistance – Sell) – $1,320.7
R4 (Long Breakout) – $1,324.3
R5 (Breakout Target 1) – $1,328.5
R6 (Breakout Target 2) – $1,330.3

S1 – $1,315.9
S2 – $1,314.7
S3 (Range Support – Buy) – $1,313.5
S4 (Short Breakout) – $1,309.9
S5 (Breakout Target 1) – $1,305.7
S6 (Breakout Target 2) – $1,303.9

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

Central Pivot Point – $1,331.9
R1 – $1,342.8
R2 – $1,359.7
R3 – $1,370.6
R4 – $1,381.5

S1 – $1,315.0
S2 – $1,304.1
S3 – $1,287.2
S4 – $1,270.3

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

Central Pivot Point – $1,330.8
R1 – $1,354.8
R2 – $1,398.1
R3 – $1,422.1
R4 – $1,446.0

S1 – $1,287.5
S2 – $1,263.5
S3 – $1,220.2
S4 – $1,176.8