Gold trading outlook: futures bounce from 5.5-month lows as USD pulls back from 1-year highs, US retail sales data eyed

On Monday (in GMT terms) gold for delivery in December traded within the range of $1,211.0-$1,230.9. Futures closed at $1,221.7, edging down 0.21% compared to Friday’s close. It has been the 203rd drop in the past 380 trading days and also a sixth consecutive one. The daily low has been a level not seen since June 3rd, when a low of $1,206.4 a troy ounce was registered. The precious metal has extended its slump to 4.04% 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 0.19% on Tuesday to trade at $1,224.0 per troy ounce. The precious metal went up as high as $1,231.4 during early European trade, while the current daily low was at $1,219.8 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 0.25% on the day at a level of 99.78, after going down as low as 99.48 earlier. Yesterday the index climbed as high as 100.24, which has been its highest level since December 3rd 2015. The gauge has pared its advance to 1.37% so far in November, following a 3.18% surge in October.

Gold futures rebounded from 5.5-month lows in early European trade on Tuesday, as the US Dollar pulled back from highs unseen in almost a year on profit taking.

Today gold trading may be strongly influenced by the key monthly report on US retail sales. Sales at retailers in the country probably rose for a second straight month in October, according to the median forecast by experts, going up at a monthly rate of 0.6%. In September, sales went up by another 0.6%, or at the fastest monthly rate since June. US core retail sales, or retail sales ex autos, probably rose 0.5% in October compared to a month ago, according to market expectations, following a 0.3% increase in September. In case the general index of sales surged at a sharper rate than anticipated in October, this would have a strong bullish effect on the US dollar and would mount selling pressure on gold. The official report by the US Census Bureau is due out at 13:30 GMT.

Additionally, market players will be paying a close attention to the public appearance of several Fed officials. At 12:30 GMT the Fed President for Boston, Eric Rosengren, is to deliver keynote address at the Portland Chamber of Commerce in Portand.

At 18:30 GMT Federal Reserve Vice Chairman, Stanley Fischer, is to speak at the Brookings Institution in Washington, D.C. Economic outlook or monetary policy-related remarks would heighten USD and gold volatility.

Meanwhile, medium-term investor rate hike expectations continued to increase, hitting highs unseen in more than a year.

According to CME’s FedWatch Tool, as of November 14th, market players saw an 85.8% chance of a rate hike occurring at the Federal Reserve’s policy meeting in December, up from 81.1% in the prior business day, and an 86.7% chance of a hike in February 2017, up from 81.8% in the preceding business day. As far as the March 15th 2017 meeting is concerned, the probability of such a move was seen at 88.5% on November 14th, up from 84.3% 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 – $1,223.5
R2 – $1,225.3
R3 (Range Resistance – Sell) – $1,227.2
R4 (Long Breakout) – $1,232.6
R5 (Breakout Target 1) – $1,239.0
R6 (Breakout Target 2) – $1,241.8

S1 – $1,219.9
S2 – $1,218.1
S3 (Range Support – Buy) – $1,216.2
S4 (Short Breakout) – $1,210.8
S5 (Breakout Target 1) – $1,204.4
S6 (Breakout Target 2) – $1,201.6

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