Gold trading outlook: futures rebound from 2-week lows ahead of Fed speakers

On Tuesday (in GMT terms) gold for delivery in August traded within the range of $1,331.00-$1,358.70. Futures closed at $1,335.30, plummeting 1.45% compared to Monday’s close. It has been the 156th drop in the past 292 trading days, a fourth consecutive one and also the steepest one since June 21st, when the commodity fell 1.51%. The daily low has been the lowest price level since July 1st, when a low of $1,321.90 per troy ounce was registered. The commodity has trimmed its advance to 1.85% so far during the current month, after surging 8.53% in June.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in August were edging up 0.47% on Wednesday to trade at $1,341.55 per troy ounce. The precious metal went up as high as $1,344.95 during early European trade, while the current daily low was at $1,328.00 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 inching down 0.05% on the day at a level of 96.50, after falling to as low as 96.36 earlier. The index has erased earlier losses and is now up 0.30% so far during the current month, following a 0.33% increase in June.

Today gold trading may be influenced by the statements by a number of Federal Reserve officials, as market participants will be searching for clues over the Fed’s future policy stance. At 10:00 GMT the Fed President for Philadelphia, Patrick Harker, is expected to speak, followed by the Fed President for Dallas, Robert Kaplan, at 13:00 GMT.

Additionally, at 18:00 GMT the Federal Reserve is to release its ”Beige Book” report. In case the publication presents an optimistic economic outlook, this will usually support the US Dollar and mount selling pressure on gold, while a pessimistic view will have the opposite effects.

In their speeches on Tuesday, two FOMC members noted that the Bank should not be in a hurry to lift the target range for the federal funds rate, as it was still short of its employment and inflation objectives.

According to CME’s FedWatch Tool, as of July 12th, market players saw a 17.8% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, up from 11.9% in the prior day, and a 19.5% chance of a hike in November, up from 11.6% in the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 38.4%, up from 32.0% in the preceding day. At the same time, the probability of a rate cut occurring in July stood at 1.2% as of July 12th, unchanged from July 11th.

Meanwhile, silver futures for delivery in September were gaining 1.20% on the day to trade at $20.413 per troy ounce, after going up as high as $20.523 a troy ounce during the late 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 – $1,337.84
R2 – $1,340.38
R3 (Range Resistance – Sell) – $1,342.92
R4 (Long Breakout) – $1,350.54
R5 (Breakout Target 1) – $1,359.43
R6 (Breakout Target 2) – $1,363.09

S1 – $1,332.76
S2 – $1,330.22
S3 (Range Support – Buy) – $1,327.68
S4 (Short Breakout) – $1,320.07
S5 (Breakout Target 1) – $1,311.17
S6 (Breakout Target 2) – $1,307.51

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

Central Pivot Point – $1,356.35
R1 – $1,377.70
R2 – $1.398.80
R3 – $1,420.15
R4 – $1,441.50

S1 – $1,335.25
S2 – $1,313.90
S3 – $1,292.80
S4 – $1,271.70

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

Central Pivot Point – $1,293.13
R1 – $1,380.87
R2 – $1,443.33
R3 – $1,531.07
R4 – $1,618.80

S1 – $1,230.67
S2 – $1,142.93
S3 – $1,080.47
S4 – $1,018.00