Commodity Market: Gold heads for second straight week of losses, remains supported above $1,920

Spot Gold erased part of Thursday’s gains, but remained supported above the $1,920 mark in Europe on Friday. Still, the commodity was poised for a second straight week of decline, as the US Dollar pared earlier losses.

Yesterday the precious metal rose almost 1%, as the dollar and US bond yields dropped after an unexpected rise in US jobless claims, which added to concerns over a slower economic recovery from the coronavirus crisis.

The number of Americans who filed for unemployment assistance increased to 1.106 million during the business week ended on August 14th, against expectations of a drop to 925,000.

“A deterioration in U.S. labor market data, falling bond yields and continued geopolitical tensions continue to support gold,” National Australia Bank economist John Sharma said.

“We see gold trading between $1,920 and $1,980 in the near term,” he added.

“Despite the rebound in prices, precious metals do have short-term downside risks that would continue to affect prices,” Phillip Futures analysts wrote in an investor note.

An improvement in risk sentiment as well as news of progress toward a COVID-19 vaccine could dampen demand for the safe haven metal.

As of 9:26 GMT on Friday Spot Gold was losing 0.70% to trade at $1,933.55 per troy ounce, while moving within a daily range of $1,928.47-$1,956.09. 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 was poised to register its second straight week of losses, while being down 0.67%.

Meanwhile, Gold futures for delivery in December were edging down 0.31% on the day to trade at $1,940.50 per troy ounce, while Silver futures for delivery in September were down 0.12% to trade at $27.115 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 0.26% on Friday to 92.98, while remaining not far from Wednesday’s 27 1/2-month low.

In terms of macro data, today Gold traders will be paying attention to the monthly report on US existing home sales at 14:00 GMT. The sales index probably rose 14.7% to a seasonally adjusted annual level of 5.38 million units in July compared to June, according to market consensus.

Meanwhile, near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of August 21st, 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 20th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,942.43
R1 – $1,960.00
R2 – $1,973.04
R3 – $1,990.61
R4 – $2,008.18

S1 – $1,929.40
S2 – $1,911.83
S3 – $1,898.79
S4 – $1,885.75