Commodity Market: Gold eases from record highs, but poised for biggest monthly gain since February 2016

Gold eased from Tuesday’s all-time high during European trade on Thursday, as the US Dollar managed to recoup part of earlier losses, bouncing from more than two-year lows. Still, the precious metal was set to register its best monthly performance since February 2016, while being up 9.95% so far in July.

The Federal Reserve kept the target range for the federal funds rate intact at 0%-0.25% at its policy meeting concluded yesterday, in line with market expectations, and reiterated its commitment to use the entire range of policy tools in support of the economy.

The central bank also indicated that borrowing costs would remain close to zero for as long as necessary, so that the economy could weather the negative effects from the COVID-19 pandemic and is again on track to achieve the bank’s maximum employment and price stability objectives.

However, Fed Chair Jerome Powell warned that a continuing surge in new COVID-19 infections across the United States had already begun to weigh on economic activity, but pledged the bank would “do what we can and for as long as it takes” to limit the negative impact from the raging pandemic.

The latest data by the Center for Systems Science and Engineering at Johns Hopkins University showed total confirmed COVID-19 cases had already surpassed 17.039 million worldwide, with US cases now exceeding 4.426 million. Global death toll has surpassed 667,000, with more than 150,000 deaths reported in the United States alone.

As of 9:13 GMT on Thursday Spot Gold was losing 1.15% to trade at $1,948.32 per troy ounce, while moving within a daily range of $1,945.11-$1,971.65. The precious metal has gained 2.71% so far this week, following a 5.06% advance in the prior week – its best performance since the business week ended on March 27th.

Meanwhile, Gold futures for delivery in August were losing 0.69% on the day to trade at $1,939.90 per troy ounce, while Silver futures for delivery in September were down 4.49% to trade at $23.230 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 up 0.27% on Thursday to 93.51, after slipping as low as 93.18 yesterday, or its weakest level since May 17th 2018 (93.12).

Today Gold traders will be paying attention to the preliminary US GDP data for Q2 at 12:30 GMT. It may show that economy contracted at an annualized rate of 34.1% during the second quarter, according to market consensus.

Meanwhile, near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of July 30th, 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 September 15th-16th, or unchanged compared to July 29th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,964.43
R1 – $1,987.33
R2 – $2,003.74
R3 – $2,026.64
R4 – $2,049.54

S1 – $1,948.01
S2 – $1,925.11
S3 – $1,908.69
S4 – $1,892.28