Commodity Market: Gold trades near 1-month highs as surging new COVID-19 cases raise concerns over economic recovery

Spot Gold kept trading in proximity to fresh one-month highs during European session on Monday, as rising new coronavirus cases added to concerns over a more prolonged global economic recovery, triggering a move into the safe haven metal.

According to data by the World Health Organization, new confirmed COVID-19 cases across the globe rose at a record daily rate of 183,020 on Sunday.

“General risk aversion is helping the market, we are seeing pressure on growth exposed currencies and on share markets. Overall, there are concerns about increasing infection rates,” Michael McCarthy, chief strategist at CMC Markets, said.

“The market is concerned about the outlook for growth and that of course is supportive for gold.”

Two Fed officials on Friday also provided rather cautious remarks regarding the swiftness of economic recovery amid spiraling new cases of the illness in a number of states and also warned of potentially higher rate of unemployment in case the virus is not brought under control soon.

“This lack of containment could ultimately lead to a need for more prolonged shut-downs, which result in reduced consumption and investment, and higher unemployment,” Boston Fed President Eric Rosengren warned.

Fed President for Minneapolis Neel Kashkari also expects a longer period of recovery and said the recent tendency on job gains might be reversed if a second wave of the virus is indeed observed.

As of 9:32 GMT on Monday Spot Gold was edging up 0.24% to trade at $1,748.31 per troy ounce, after earlier touching an intraday high of $1,758.68, or a price level not seen since May 18th ($1,765.26). Meanwhile, Gold futures for delivery in August were gaining 0.48% on the day to trade at $1,761.35 per troy ounce, while Silver futures for delivery in July were up 1.18% to trade at $18.058 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging down 0.29% on Monday to 97.38, after earlier climbing as high as 97.74, or a level not seen since June 2nd (97.91).

Today Gold traders will be expecting the monthly report on US existing home sales at 14:00 GMT. Sales of previously owned houses probably dropped 2.3% to a seasonally adjusted annual level of 4.20 million units in May compared to a month ago, according to market consensus.

Meanwhile, near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of June 22nd, 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 June 19th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,737.04
R1 – $1,752.43
R2 – $1,760.68
R3 – $1,776.07
R4 – $1,791.46

S1 – $1,728.80
S2 – $1,713.40
S3 – $1,705.16
S4 – $1,696.92