Commodity Market: Gold poised for third straight week of losses on recovery optimism, US NFP data now in focus

Gold was set to register its third straight week of losses on mounting economic recovery optimism, as markets now awaited the more comprehensive US non-farm payrolls report.

Data by ADP showed on Wednesday that US private sector had fired only 2.76 million workers in May, following April’s record drop in employment.

Another positive signal came after the US Labor Department reported yesterday that the number of people filing for unemployment assistance for the first time during the business week ended May 29th had eased to 1.877 million. It has been the lowest number of claims since the start of the coronavirus crisis in mid-March.

The yellow metal has retreated almost 1.2% so far this week, poised for the largest decline since the business week ended on May 1st.

“Gold prices have been under pressure after a miraculous stock market run that seems to be showing some signs of plateauing,” Edward Moya, a senior market analyst at OANDA, said.

Asian shares registered their best weekly performance in at least 8 years, with Japan’s Nikkei 225 gaining 4.51%, Hang Seng – 7.88%, Shanghai SE Composite – 2.75% and Australia’s ASX – 4.16%.

In Europe, FTSE 100 was gaining 1.15% in early trade on Friday, France’s CAC 40 – 2.14%, while Germany’s DAX – 2.01%.

Still, however, Gold-supporting factors remain, including weakening US Dollar, strained US-China relations, risk of a second COVID-19 wave as well as monetary stimulus packages.

The ECB announced a larger-than-expected increase in its bond-purchasing programme on Thursday, while Federal Reserve policy makers meet next week.

As of 9:30 GMT on Friday Spot Gold was losing 0.31% to trade at $1,708.96 per troy ounce, as the precious metal was moving within a relatively narrow daily range of $1,707.05-$1,716.88. Meanwhile, Gold futures for delivery in August were retreating 0.76% on the day to trade at $1,714.25 per troy ounce, while Silver futures for delivery in July were down 0.74% to trade at $17.927 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was retreating for a ninth straight day on Friday, down 0.20% to 96.57, after earlier touching an intraday low of 96.44, or a level not seen since March 12th (96.08).

Today’s market focus will be on the US non-farm payrolls report at 12:30 GMT. US economy probably lost 8.0 million jobs in May, according to market expectations, after 20.537 million jobs were lost in April. Meanwhile, the US rate of unemployment probably surged to 19.8% in May from 14.7% in April.

Meanwhile, near-term interest rate expectations were little changed. According to CME’s FedWatch Tool, as of June 5th, investors saw a 92.1% chance of the Federal Reserve keeping borrowing costs at the current 0%-0.25% level at its policy meeting on June 9th-10th, compared with a 91.4% probability a day ago.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,711.03
R1 – $1,724.72
R2 – $1,735.17
R3 – $1,748.86
R4 – $1,762.55

S1 – $1,700.58
S2 – $1,686.89
S3 – $1,676.44
S4 – $1,665.99