Gold trading outlook: futures advance a fifth straight day as US retail sales disappoint

October 15, 2015 8:53 am

On Wednesday gold for delivery in December traded within the range of $1,167.30-$1,189.00. Futures closed at $1,180.10, rising 1.23% on a daily basis, while marking a fourth consecutive trading day of gains. The daily rate of increase has been the most notable one since October 2nd, when the commodity added 2.06%. The daily high, in addition, has been the highest price level since June 22nd, when gold went up as high as $1,197.80.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December were gaining 0.40% for the day to trade at $1,184.50 per troy ounce. The yellow metal tested the range resistance level (R3), as it went up as high as $1,187.10 earlier today.

US producer prices and retail sales disappoint in September

Yesterday annual producer prices in the United States were reported to have dropped for an eighth consecutive month in September, down 1.1%, following a 0.8% slump in the prior month. The median forecast by analysts pointed to a lesser annual drop, 0.7%.

In addition, monthly retail sales came below expectations, with the general index increasing 0.1% in September. The index performance in August has been revised down to flat from a 0.2% gain previously. Core retail sales, which exclude automobile sales, dropped more than anticipated last month, by 0.3% instead of 0.1%. It has been the sharpest monthly slump since January. August’s core retail sales have been revised down to a 0.1% drop from a 0.1% gain previously.

The data added to the case that the Federal Reserve Bank may probably delay its decision to hike borrowing costs until 2016. Maintaining interest rates at the current low levels is usually considered as a bullish factor for gold, as investors tend to have a lesser appetite for risk. The report on US consumer prices today may further bolster the case mentioned above.

US CPI

The annualized consumer inflation in the United States probably entered into negative territory for the first time since April in September, slipping to -0.1%, according to market expectations. In August consumer prices rose 0.2% year-on-year. In monthly terms, the Consumer Price Index (CPI) probably fell for a second consecutive month in September, down 0.2%, after six straight monthly increases. In July the CPI went up at a monthly rate of 0.1%.

The annualized core consumer inflation, which is stripped of prices of food and energy, probably remained steady at 1.8% for a fourth consecutive month in September, according to the median forecast by experts.

In case the annual CPI met expectations or went further into negative territory, this would have a strong bearish effect on the US dollar and a strong bullish effect on gold. The Bureau of Labor Statistics is to release the official CPI report at 12:30 GMT.

Daily and Weekly Pivot Levels

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

R1 – $1,182.09
R2 – $1,184.08
R3 (range resistance) – $1,186.07
R4 (range breakout) – $1,192.04

S1 – $1,178.11
S2 – $1,176.12
S3 (range support) – $1,174.13
S4 (range breakout) – $1,168.17

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

Central Pivot Point – $1,148.67
R1 – $1,164.83
R2 – $1,173.37
R3 – $1,189.53

S1 – $1,140.13
S2 – $1,123.97
S3 – $1,115.43

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