Gold trading outlook: futures trade little changed ahead of US data string, Fed speakers

On Thursday (in GMT terms) gold for delivery in December traded within the range of $1,254.7-$1,263.9. Futures closed at $1,257.6, edging up 0.30% compared to Wednesday’s close. It has been the 167th gain in the past 358 trading days. The precious metal has pared its drop to 4.52% 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 0.06% on Friday to trade at $1,256.9 per troy ounce. The precious metal went up as high as $1,260.3 during early Asian trade, while the current daily low was at $1,255.4 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 0.34% on the day at a level of 97.86, after going up as high as 97.97 earlier. Yesterday the index climbed as high as 98.12, reaching its highest level since March 10th. The gauge has extended its advance to 2.58% so far in October, following a 0.65% drop in September.

On Thursday gold futures rebounded, as US bond yields moderated, while Chinas recent trade data spooked market players. However, the US dollar still drew support on Friday after the Minutes from the Federal Open Market Committees September 20th-21st meeting revealed that the decision to keep borrowing costs intact was a close call. The document showed that policy makers agreed the case for a hike had gained strength over the past months. Some of the Committee members believed that raising the target range for the federal funds rate relatively soon would be appropriate, in case US labor market conditions continued to improve and overall economic activity continued to strengthen.

Market players now shift their focus to todays reports on US retail sales and consumer sentiment for further clues on macroeconomic environment, as well as to the public appearances of several Fed officials. At 12:30 GMT the Federal Reserve President for Boston and also a FOMC member, Eric Rosengren, is expected to speak at “The Elusive “Great” Recovery: Causes and Implications for Future Business Cycle Dynamics” conference, which will be hosted by the Federal Reserve Bank of Boston. At 17:30 GMT Federal Reserve Chair, Janet Yellen, is to take speak during the same event. Any remarks in regard to US economic outlook, or the Bank’s monetary policy stance would heighten USD and gold volatility.

A report by the US Census Bureau may show that retail sales in the country rebounded in September, according to the median forecast by experts, going up at a monthly rate of 0.6%. In August sales fell 0.3%. At the same time, US core retail sales probably rose 0.4% in September compared to a month ago, according to market expectations, following an unexpected 0.1% drop in August. In case the general index of sales rebounded at a sharper rate than anticipated in September, this would have a strong bullish effect on the US dollar and would mount pressure on gold. The official report is due out at 12:30 GMT.

Additionally, the monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States improved in October. The preliminary reading of the corresponding index, which usually comes out two weeks ahead of the final data, probably was at 91.9 during the current month from a final 91.2 in September. The latter came above the preliminary reading of 89.8. In case the gauge of consumer sentiment met or even exceeded expectations in October, this would have a moderate-to-strong bullish effect on the US Dollar and a moderate-to-strong bearish effect on gold. The preliminary reading is to be released at 14:00 GMT.

Meanwhile, investor medium-term rate hike expectations remained in proximity to four-month highs.

According to CME’s FedWatch Tool, as of October 13th, market players saw an 8.3% chance of a rate hike occurring at the Federal Reserve’s policy meeting in November, or unchanged compared to the prior four business days, and a 65.1% chance of a hike in December, down from 69.5% in the preceding three business days. As far as the February 1st 2017 meeting is concerned, the probability of such a move was seen at 67.9% on October 13th, down from 71.9% in the prior three business days.

Daily, Weekly and Monthly Pivot Levels

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

R1 – $1,258.4
R2 – $1,259.3
R3 (Range Resistance – Sell) – $1,260.1
R4 (Long Breakout) – $1,262.7
R5 (Breakout Target 1) – $1,265.6
R6 (Breakout Target 2) – $1,266.8

S1 – $1,256.8
S2 – $1,255.9
S3 (Range Support – Buy) – $1,255.1
S4 (Short Breakout) – $1,252.5
S5 (Breakout Target 1) – $1,249.6
S6 (Breakout Target 2) – $1,248.4

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

Central Pivot Point – $1,272.6
R1 – $1,301.9
R2 – $1,352.0
R3 – $1,381.3
R4 – $1,410.7

S1 – $1,222.5
S2 – $1,193.2
S3 – $1,143.1
S4 – $1,093.1

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