Commodity Market: Gold rebounds due to broadly weaker US Dollar as recovery worries persist

Spot Gold rebounded on Thursday and maintained ground above the $1,900 mark, as US 10-Year Bond yields eased from one-month highs, thus, lowering the opportunity cost of holding the yellow metal, while the US Dollar weakened against major peers due to continuing political stalemate in the United States over coronavirus aid.

The impasse is obstructing relief for tens of millions of American citizens.

“Gold’s roller-coaster ride is far from over as bond yields will likely remain volatile for the rest of the summer,” Edward Moya, senior market analyst at Oanda, said.

“The relentless pace higher for gold will moderate but the outlook still warrants a strong stretch of fresh, record highs.”

Economic recovery in the US will probably remain sluggish until the coronavirus crisis is brought under control, while US citizens will need to manage life with COVID-19 for at least the next several months, Federal Reserve officials said earlier this week.

The latest data by the Center for Systems Science and Engineering at Johns Hopkins University showed total confirmed COVID-19 cases had already surpassed 20.624 million worldwide, with US cases now exceeding 5.197 million. Global death toll has surpassed 749,000, with more than 166,000 deaths reported in the United States alone.

As of 9:12 GMT on Thursday Spot Gold was gaining 0.92% to trade at $1,934.18 per troy ounce, while moving within a daily range of $1,913.06-$1,942.84. The precious metal advanced 10.95% in July, while marking its fourth consecutive month of gains and also the best monthly performance since January 2012. The commodity has retreated 5.07% so far this week, but its year-to-date gain is still over 27%.

Meanwhile, Gold futures for delivery in December were edging down 0.21% on the day to trade at $1,945.00 per troy ounce, while Silver futures for delivery in September were up 0.60% to trade at $26.135 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 0.33% on Thursday to 93.11, while being not far from last week’s 26 1/2-month low (92.52). Weaker US Dollar tends to make Gold cheaper for holders of other currencies.

Today Gold traders will be paying attention to the weekly data 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 August 7th, probably eased to 1,120,000, according to market expectations, from 1,186,000 in the preceding week.

Meanwhile, near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of August 13th, 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 August 12th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,909.68
R1 – $1,956.46
R2 – $1,996.28
R3 – $2,043.07
R4 – $2,089.85

S1 – $1,869.86
S2 – $1,823.08
S3 – $1,783.26
S4 – $1,743.44