Gold trading outlook: futures plunge to 5 1/2-month lows, as USD reaches a 1-year peak on increased rate hike expectations

On Friday (in GMT terms) gold for delivery in December traded within the range of $1,218.7-$1,265.0. Futures closed at $1,224.3, plummeting 3.32% compared to Thursday’s close. It has been the 202nd drop in the past 379 trading days, a fifth consecutive one and also the sharpest one since October 4th. The daily low has been a level not seen since June 3rd, when a low of $1,206.4 a troy ounce was registered. In weekly terms, gold futures lost 6.15% of their value during the past week. It has been the 20th drop in the past 45 weeks and also the steepest one in more than 3 years. The precious metal has extended its slump to 3.83% so far during the current month, after losing 3.34% in October.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were edging up 0.14% on Monday to trade at $1,226.0 per troy ounce. The precious metal went up as high as $1,230.9 during early Asian trade, while the current daily low was at $1,212.0 per troy ounce, recorded during the late 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 advancing 0.81% on the day at a level of 99.80, after going up as high as 100.03 earlier. The latter has been the highest level for this index since December 3rd 2015. The gauge has increased its advance to 1.40% so far in November, following a 3.18% surge in October.

Gold futures retreated for a sixth straight trading day earlier on Monday, reaching a fresh five-and-a-half-month low, as potential higher fiscal spending and tax cuts under Trumps administration heightened investor optimism that a period of higher interest rates probably lies ahead.

With the US Presidential election already being a part of history, market focus once again shifts towards US macroeconomic environment and the Federal Reserves policy meeting in December.

Today market players will be paying a close attention to the public appearance of several Fed officials. At 22:00 GMT the Fed President for Richmond, Jeffrey Lacker, is scheduled to speak at a media Q&A before attending a panel discussion on “Our Fiscal Health: How the National Debt Could Impact the Future for America’s Youth” at Washington College in Chestertown, Maryland.

At 23:30 GMT the Fed President for San Francisco, John Williams, is to attend a panel discussion at the Bay Area Council in San Francisco. Economic outlook or monetary policy-related remarks would certainly heighten USD and gold volatility.

Meanwhile, medium-term investor rate hike expectations reached highs unseen in at least a year.

According to CME’s FedWatch Tool, as of November 11th, market players saw an 81.1% chance of a rate hike occurring at the Federal Reserve’s policy meeting in December, up from 71.5% in the prior business day, and an 81.8% chance of a hike in February 2017, up from 73.3% in the preceding business day. As far as the March 15th 2017 meeting is concerned, the probability of such a move was seen at 84.3% on November 11th, up from 75.6% in the prior business day.

Daily, Weekly and Monthly Pivot Levels

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

R1 – $1,228.5
R2 – $1,232.8
R3 (Range Resistance – Sell) – $1,237.0
R4 (Long Breakout) – $1,249.8
R5 (Breakout Target 1) – $1,264.6
R6 (Breakout Target 2) – $1,270.8

S1 – $1,220.1
S2 – $1,215.8
S3 (Range Support – Buy) – $1,211.6
S4 (Short Breakout) – $1,198.8
S5 (Breakout Target 1) – $1,184.0
S6 (Breakout Target 2) – $1,177.8

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

Central Pivot Point – $1,260.4
R1 – $1,302.2
R2 – $1,380.0
R3 – $1,421.8
R4 – $1,463.5

S1 – $1,182.6
S2 – $1,140.8
S3 – $1,063.0
S4 – $985.1

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

Central Pivot Point – $1,279.6
R1 – $1,316.1
R2 – $1,359.0
R3 – $1,395.5
R4 – $1,431.9

S1 – $1,236.7
S2 – $1,200.2
S3 – $1,157.3
S4 – $1,114.3