Gold trading outlook: futures fall to 1-week lows ahead of an array of statements by Fed officials, Yellen’s testimony in focus

On Tuesday (in GMT terms) gold for delivery in December traded within the range of $1,327.7-$1,343.5. Futures closed at $1,330.4, plummeting 1.02% compared to Monday’s close. It has been the 182nd drop in the past 346 trading days and also the steepest one since August 24th. The daily low has been a level unseen since September 21st, when the commodity went down as low as $1,310.9 per troy ounce. The precious metal has trimmed its advance to 1.45% 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 down 0.16% on Wednesday to trade at $1,328.2 per troy ounce. The precious metal went up as high as $1,331.1 during early Asian trade, while the current daily low was at $1,325.6 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 0.14% on the day at a level of 95.48, after going up as high as 95.62 earlier. The latter has been the highest level for this index since September 21st. The gauge has trimmed its drop to 0.55% so far in September, following a 0.54% advance in August.

Investor risk appetite remained high, pressuring gold prices, after during the first US presidential debate on September 26th Democratic candidate Hillary Clinton clearly overshadowed the Republican Donald Trump. Two more presidential debates are to follow before the election in November – on October 9th and on October 19th.

Today gold trading may be strongly influenced by the monthly report on US durable goods orders. The value of durable goods orders probably shrank 1.4% in August from a month ago, according to the median forecast by experts. In July, orders rose at a monthly rate of 4.4%, recovering after two consecutive months of decline. It has been the steepest monthly increase since October 2015. In case the general index dropped at a faster-than-projected rate in August, this would have a strong bearish effect on the US dollar and a strong bullish effect on gold, due to negative implications in regard to the wider gauge of production, factory orders. The US Census Bureau is scheduled to release the official report at 12:30 GMT.

Market players will be also paying a close attention to the public appearances of several Federal Reserve officials. At 12:45 GMT Federal Open Market Committee member, Neel Kashkari, is expected to speak, followed by James Bullard at 14:15 GMT, Charles Evans at 17:30 GMT, Loretta Mester at 20:35 GMT and Esther George at 23:15 GMT. Any hints in regard to the Bank’s policy stance or US economic outlook would certainly heighten gold volatility.

Another key event is scheduled for 14:00 GMT, when Fed Chair, Janet Yellen, is to give semi-annual testimony on Federal Reserve supervision and regulation of the financial system in front of the House Financial Services Committee.

Meanwhile, on Tuesday evening, Fed Vice Chairman, Stanley Fischer, said the central bank should take a more cautious approach, when removing policy accommodation. He noted interest rates should be raised, but did not hint on any time frame. Also on Tuesday the Fed President for San Francisco, John Williams, said a rate hike could be introduced without threatening economic recovery.

The yellow metal reached highs unseen since September 8th last week, after the Federal Reserve left the target range for the federal funds rate intact between 0.25% and 0.50% for a sixth consecutive meeting, as largely expected.

According to CME’s FedWatch Tool, as of September 27th, market players saw an 8.3% chance of a rate hike occurring at the Federal Reserve’s policy meeting in November, down from 10.3% in the prior business day, and a 47.7% chance of a hike in December, down from 48.8% in the preceding business day. As far as the February 1st 2017 meeting is concerned, the probability of such a move was seen at 50.8% on September 27th, down from 52.9% in the prior business day.

Elsewhere, silver futures for delivery in December were inching up 0.09% on the day to trade at $19.182 per troy ounce, after going up as high as $19.263 a troy ounce during the early phase of the Asian trading session. Yesterday the metal slipped to $19.045 a troy ounce, or its lowest price level since September 19th.

Daily, Weekly and Monthly Pivot Levels

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

R1 – $1,331.8
R2 – $1,333.3
R3 (Range Resistance – Sell) – $1,334.7
R4 (Long Breakout) – $1,339.1
R5 (Breakout Target 1) – $1,344.2
R6 (Breakout Target 2) – $1,346.2

S1 – $1,329.0
S2 – $1,327.5
S3 (Range Support – Buy) – $1,326.1
S4 (Short Breakout) – $1,321.7
S5 (Breakout Target 1) – $1,316.6
S6 (Breakout Target 2) – $1,314.6

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

Central Pivot Point – $1,333.5
R1 – $1,356.0
R2 – $1,370.4
R3 – $1,392.9
R4 – $1,415.5

S1 – $1,319.1
S2 – $1,296.6
S3 – $1,282.2
S4 – $1,267.9

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