Commodity Market: Gold remains stable as US Dollar holds gains, BoE decision on quantitative easing awaited

Gold traded in a relatively narrow range on Thursday, as the US Dollar maintained recent gains against peers, while markets awaited Bank of England’s policy decision for clarity over its quantitative easing program.

“We’re not really seeing a clear-cut catalyst for gold here. On the one hand, we’re getting a stronger U.S. dollar because the recent comments from the Federal Reserve are supportive,” DailyFx currency strategist Ilya Spivak said.

“On the other hand, the absence of more stimulus has weighed on the sentiment and bond yields have fallen. These conflicting influences are keeping gold pretty well anchored,” Spivak added.

In his testimony before the House Financial Services Committee on Wednesday Federal Reserve Chair Jerome Powell said the US economy had begun recovering from the worst of the COVID-19 crisis. However, with 25 million American citizens displaced from work and new infections still rising across several states, more support will be needed, Powell said, while noting the US Congress should also do its part.

“We at the Fed need to keep our foot on the gas until we are really sure we are through this, and that’s our intention, and I think you may find that there’s more for you to do as well,” Powell told Committee members. “It would be a concern if Congress were to pull back on the support that it’s providing, too quickly,” he said.

As of 9:16 GMT on Thursday Spot Gold was gaining 0.52% to trade at $1,735.71 per troy ounce, after earlier touching an intraday high of $1,737.83, or a price level not seen since June 12th ($1,743.34). Meanwhile, Gold futures for delivery in August were gaining 0.56% on the day to trade at $1,745.25 per troy ounce, while Silver futures for delivery in July were up 0.58% to trade at $17.878 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was inching up 0.02% on Thursday to 97.09, after earlier climbing as high as 97.19, or a level not far from Wednesday’s high.

Today Gold traders will be expecting the outcome from Bank of England’s monetary policy meeting at 11:00 GMT. The bank is largely anticipated to leave the key bank rate at the record low level of 0.1% and to bolster its bond purchasing program by GBP 100 billion to GBP 745 billion.

Central bank stimulus measures tend to support Gold, as the yellow metal is largely considered as a hedge against inflation.

Market players will be also paying attention to the weekly report on US jobless claims at 12:30 GMT. The number of people in the country, who filed for unemployment assistance for the first time during the business week ended June 12th, probably eased to 1,300,000, according to market expectations, from 1,542,000 in the preceding week.

Meanwhile, near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of June 18th, investors saw a 100.0% chance of the Federal Reserve keeping borrowing costs at the current 0%-0.25% level at its policy meeting on July 28th-29th, or unchanged compared to a day ago.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,723.25
R1 – $1,733.73
R2 – $1,740.69
R3 – $1,751.17
R4 – $1,761.64

S1 – $1,716.29
S2 – $1,705.81
S3 – $1,698.85
S4 – $1,691.88