Gold trading outlook: futures bounce from two-week lows, as the Dollar comes under pressure ahead of the FOMC policy meeting

On Friday (in GMT terms) gold for delivery in December traded within the range of $1,309.2-$1,321.5. Futures closed at $1,310.2, shedding 0.59% compared to Thursday’s close. It has been the 180th drop in the past 339 trading days and also a second consecutive one. The daily low has been a level unseen since September 2nd, when a low of $1,307.4 per troy ounce was registered. In weekly terms, gold futures lost 1.82% of their value. It has been the 17th drop in the past 37 weeks and also the steepest one since the week ended on July 17th. The precious metal has neutralized its advance and is now down 0.09% so far during the current month, after losing 3.40% in August.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were edging up 0.54% on Monday to trade at $1,317.3 per troy ounce. The precious metal went up as high as $1,321.8 during early European trade, while the current daily low was at $1,312.6 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 edging down 0.23% on the day at a level of 95.83, after going down as low as 95.78 earlier. The index went up as high as 96.12 on September 16th, which has been a level unseen since September 1st. The gauge has trimmed its drop to 0.20% so far in September, following a 0.54% advance in August.

Last Friday gold futures plunged to fresh 2-week lows, as the US Dollar received a boost, following the upbeat US CPI report. The Bureau of Labor Statistics said consumer prices rose at a monthly rate of 0.2% in August, while exceeding the median forecast by analysts, following a flat performance in July. Additionally, annualized consumer inflation in the country was reported to have accelerated to 1.1% in August, again outstripping market expectations, from 0.8% in July. It has been the highest inflation rate in four months, supported by higher cost of shelter, medical care and transportation. Annualized core inflation, which does not take into account cost of food and energy, accelerated to 2.3% in August from 2.2% in July, while the market consensus pointed to a stable performance.

However, investors near-term rate expectations remained unchanged, as Thursdays retail sales and industrial production figures disappointed, while Fridays consumer sentiment index by Thomson Reuters/University of Michigan held steady in September. On the other hand, rate hike probability regarding the Feds December meeting rose above 50% once again.

According to CME’s FedWatch Tool, as of September 16th, market players saw a 12.0% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, or unchanged compared to the prior business day, and a 21.1% chance of a hike in November, also unchanged compared to the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 54.4% on September 16th, up from 47.5% in the preceding business day.

The Federal Open Market Committee is expected to commence its two-day policy meeting tomorrow.

Meanwhile, silver futures for delivery in December were advancing 1.73% on the day to trade at $19.188 per troy ounce, after going up as high as $19.240 a troy ounce during the mid phase of the Asian 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 – $1,311.3
R2 – $1,312.5
R3 (Range Resistance – Sell) – $1,313.6
R4 (Long Breakout) – $1,317.0
R5 (Breakout Target 1) – $1,320.9
R6 (Breakout Target 2) – $1,322.5

S1 – $1,309.1
S2 – $1,307.9
S3 (Range Support – Buy) – $1,306.8
S4 (Short Breakout) – $1,303.4
S5 (Breakout Target 1) – $1,299.5
S6 (Breakout Target 2) – $1,297.9

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

Central Pivot Point – $1,318.4
R1 – $1,327.7
R2 – $1,345.1
R3 – $1,354.4
R4 – $1,363.6

S1 – $1,301.0
S2 – $1,291.7
S3 – $1,274.3
S4 – $1,256.8

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