Gold trading outlook: futures rebound as market players reassess Fed rate outlook

On Tuesday (in GMT terms) gold for delivery in December traded within the range of $1,336.0-$1,348.5. Futures closed at $1,346.7, edging up 0.40% compared to Monday’s close. It has been the 148th gain in the past 312 trading days and also the steepest one since August 2nd. The commodity has trimmed its slump to 0.78% so far in August, after surging 2.86% in July.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were advancing 0.91% on Wednesday to trade at $1,358.9 per troy ounce. The precious metal went up as high as $1,361.5 during late Asian trade, while the current daily low was at $1,345.7 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 losing 0.50% on the day at a level of 95.58, after going down as low as 95.51 earlier. The latter has been the lowest level since August 5th. The gauge has trimmed its advance to 0.09% so far during the current month, following a 0.74% retreat in July.

US Dollar lost ground against peers and gold futures advanced, as market players re-positioned, after the downbeat report on US productivity, released Tuesday. The employee output per hour in the United States fell at an annualized rate of 0.5% during the second quarter of the year, following another 0.6% slump in the prior three months. The median forecast by experts pointed to a 0.4% productivity growth. The data curbed expectations of an early rate hike by the Federal Reserve this year.

According to CME’s FedWatch Tool, as of August 9th, market players saw a 15.0% chance of a rate hike occurring at the Federal Reserve’s policy meeting in September, up from 12.0% in the prior business day, and a 16.7% chance of a hike in November, up from 15.6% during the preceding day. As far as the December meeting is concerned, the probability of such a move was seen at 40.6% on August 9th, down from 43.9% in the preceding business day.

Meanwhile, silver futures for delivery in September were advancing 2.45% on the day to trade at $20.337 per troy ounce, after going up as high as $20.385 a troy ounce during the early phase of the European 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 – $1,347.8
R2 – $1,349.0
R3 (Range Resistance – Sell) – $1,350.1
R4 (Long Breakout) – $1,353.6
R5 (Breakout Target 1) – $1,357.6
R6 (Breakout Target 2) – $1,359.3

S1 – $1,345.6
S2 – $1,344.4
S3 (Range Support – Buy) – $1,343.3
S4 (Short Breakout) – $1,339.8
S5 (Breakout Target 1) – $1,335.8
S6 (Breakout Target 2) – $1,334.1

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

Central Pivot Point – $1,353.0
R1 – $1,365.6
R2 – $1,386.8
R3 – $1,399.4
R4 – $1,412.0

S1 – $1,331.8
S2 – $1,319.2
S3 – $1,298.0
S4 – $1,276.8

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

Central Pivot Point – $1,348.5
R1 – $1,386.5
R2 – $1,415.4
R3 – $1,453.4
R4 – $1,491.4

S1 – $1,319.5
S2 – $1,281.5
S3 – $1,252.6
S4 – $1,223.6