Gold trading outlook: futures trade close to two-week highs on market uncertainty, US durable goods orders eyed

February 25, 2016 9:45 am

On Wednesday gold for delivery in April traded within the range of $1,221.90-$1,250.10. Futures closed at $1,225.00, edging up 0.22% on a daily basis. It has been the 12th gain in the past 18 trading days and also a second consecutive one. In addition, the daily high has been the highest price level since February 11th, when a high of $1,260.80 per troy ounce was recorded. Gold has added 10.87% to its value so far during the current month.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in April were gaining 1.02% on Thursday to trade at $1,237.50 per troy ounce. The precious metal went up as high as $1,243.20 during early European trade, while the current daily low was at $1,224.80 per troy ounce, recorded during the early phase of the Asian session.

Demand for haven assets such as gold has recently increased amid persisting concerns over the potential effects, which the substantial drop in oil prices, may have on other market segments. On Tuesday Saudi Arabia oil minister, Ali al-Naimi, underscored that the country will not cut production under any circumstances, so that oil prices can distance from recent multi-year lows. Meanwhile, yesterday it became clear that Royal Dutch Shell A intends to shut down its shale resources unit and part ways with US country chairman, Marvin Odum. This decision came after the company reported its weakest revenue growth in at least a decade.

Today gold trading may be influenced by the key report on US orders for durable goods regarding January. The value of durable goods orders probably increased 2.5% in January from a month ago, according to the median forecast by experts, following a revised up 5.0% drop in December. If expectations were met, January’s rate of increase would be the strongest since October 2015, when orders were up 3.0%. Durable goods orders, which exclude transportation, probably rose 0.2% in January from a month ago, according to expectations, following a 1.2% slump in December. The latter has been the most considerable monthly drop since December 2013, when core orders were down at a revised up 1.3%. In case the general index rose at a faster-than-projected pace, this would have a strong bullish effect on the US dollar and a strong bearish effect on gold, due to positive implications in regard to the wider gauge of production, factory orders. The official report is due out at 13:30 GMT.

Market players will also watch closely the string of macroeconomic data, which is to be released out of the United States on Friday, in an attempt to assess the future path of borrowing costs in the country.

Meanwhile, silver futures for delivery in March were edging up 0.26% on the day to trade at $15.280 per troy ounce, after slipping to as low as $15.185 during early Asian trade, also an exact test of the low from February 24th.

Daily and Weekly Pivot Levels

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

Central Pivot Point – $1,232.33
R1 – $1,242.77
R2 – $1,260.53
R3 – $1,270.97

S1 – $1,214.57
S2 – $1,204.13
S3 – $1,186.37

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

Central Pivot Point – $1,221.07
R1 – $1,248.53
R2 – $1,266.67
R3 – $1,294.13

S1 – $1,202.93
S2 – $1,175.47
S3 – $1,157.33

Where to Trade

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