Gold trading outlook: futures hit fresh 1-month lows on USD strength, Fed’s Lacker statement in focus

On Monday (in GMT terms) gold for delivery in December traded within the range of $1,311.8-$1,322.6. Futures closed at $1,312.7, shedding 0.33% from Friday’s close. It has been the 185th drop in the past 350 trading days and also a second consecutive one. 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. In weekly terms, gold futures lost 1.83% of their value during the past week. It has been the 18th drop in the past 39 weeks. The precious metal has retreated 0.33% so far during the current month, after gaining 0.43% in September.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were inching down 0.04% on Tuesday to trade at $1,312.2 per troy ounce. The precious metal went up as high as $1,315.4 during early Asian trade, while the current daily low was at $1,308.7 per troy ounce, recorded during the early phase of the European trading session. The latter has been the lowest price level for gold since September 2nd ($1,307.4).

The US Dollar Index, a gauge reflecting the relative strength of the greenback against a basket of 6 other major currencies, was edging up 0.49% on the day at a level of 96.12, after going up as high as 96.13 earlier. The latter has been the highest level for this index since September 21st. The gauge has risen 0.77% so far in October, following a 0.65% drop in September.

Gold futures reached fresh 2-week lows on October 3rd, as US 2-year bond yields rose to highs unseen since September 21st. The US Dollar was broadly supported after the recent upbeat data points on consumer sentiment and manufacturing activity, which added to rate hike expectations regarding the Feds policy meeting in February 2017. Stronger dollar continued to pressure dollar-priced commodities on Tuesday as well.

Additional hints on US economic strength may be provided by the upcoming reports on services sector activity and employment conditions, scheduled for Wednesday and Friday.

Market players will be also paying a close attention to the public appearances of a number of Federal Reserve officials this week. At 12:05 GMT today the Fed President for Richmond and also a FOMC member, Jeffrey Lacker, is expected to speak at the West Virginia Economic Outlook Conference in Charleston, WV. Any remarks in regard to the Bank’s future policy or US macroeconomic environment would certainly heighten USD and gold volatility.

According to CME’s FedWatch Tool, as of October 3rd, market players saw a 10.3% chance of a rate hike occurring at the Federal Reserve’s policy meeting in November, or unchanged compared to the prior business day, and a 61.6% chance of a hike in December, also unchanged compared to the preceding business day. As far as the February 1st 2017 meeting is concerned, the probability of such a move was seen at 64.0% on October 3rd, up from 63.1% in the prior business day.

Meanwhile, silver futures for delivery in December were shedding 0.19% on the day to trade at $18.832 per troy ounce, after going down as low as $18.773 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 – $1,313.7
R2 – $1,314.7
R3 (Range Resistance – Sell) – $1,315.7
R4 (Long Breakout) – $1,318.6
R5 (Breakout Target 1) – $1,322.1
R6 (Breakout Target 2) – $1,323.5

S1 – $1,311.7
S2 – $1,310.7
S3 (Range Support – Buy) – $1,309.7
S4 (Short Breakout) – $1,306.8
S5 (Breakout Target 1) – $1,303.3
S6 (Breakout Target 2) – $1,301.9

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

Central Pivot Point – $1,326.4
R1 – $1,336.8
R2 – $1,356.5
R3 – $1,366.9
R4 – $1,377.3

S1 – $1,306.7
S2 – $1,296.3
S3 – $1,276.6
S4 – $1,256.9

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

Central Pivot Point – $1,326.7
R1 – $1,348.0
R2 – $1,378.8
R3 – $1,400.1
R4 – $1,421.3

S1 – $1,295.9
S2 – $1,274.6
S3 – $1,243.8
S4 – $1,212.9