Gold trading outlook: futures slightly changed near recent lows ahead of BoJ, Fed policy decisions

On Monday (in GMT terms) gold for delivery in December traded within the range of $1,312.6-$1,321.8. Futures closed at $1,317.8, edging up 0.58% compared to Friday’s close. It has been the 160th gain in the past 340 trading days and also the steepest one since September 6th. The precious metal has increased its advance to 0.49% 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 inching up 0.04% on Tuesday to trade at $1,318.3 per troy ounce. The precious metal went up as high as $1,321.1 during early European trade, while the current daily low was at $1,315.9 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 0.07% on the day at a level of 95.72, after going down as low as 95.53 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 increased its drop to 0.29% so far in September, following a 0.54% advance in August.

Gold futures have been holding within a relatively wide range during the past several trading days ahead of policy decisions by Bank of Japan and the Federal Reserve, scheduled on Wednesday.

Last Friday the yellow metal fell to 2-week lows, 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. Annualized core inflation 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.

According to CME’s FedWatch Tool, as of September 19th, 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 two business days, and a 19.3% chance of a hike in November, down from 21.1% in the preceding business day. As far as the December meeting is concerned, the probability of such a move was seen at 53.9% on September 19th, down from 54.9% in the prior business day.

Meanwhile, silver futures for delivery in December were inching down 0.09% on the day to trade at $19.273 per troy ounce, after going down as low as $19.195 a troy ounce during the early 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 – $1,318.6
R2 – $1,319.5
R3 (Range Resistance – Sell) – $1,320.3
R4 (Long Breakout) – $1,322.9
R5 (Breakout Target 1) – $1,325.8
R6 (Breakout Target 2) – $1,327.0

S1 – $1,317.0
S2 – $1,316.1
S3 (Range Support – Buy) – $1,315.3
S4 (Short Breakout) – $1,312.7
S5 (Breakout Target 1) – $1,309.8
S6 (Breakout Target 2) – $1,308.6

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