Commodity Market: Gold edges higher as US bond yields drop, markets focus on US NFP data for August

Spot Gold edged higher on Friday, following two straight days of losses, as the precious metal benefited from lower US bond yields and a sell-off in equities prior to the release of key US jobs data later in the day.

The yield on US 10-year government bonds was set to record the steepest weekly slump in almost three months. Lower yields on fixed income instruments tend to reduce the opportunity cost of holding safe haven Gold.

Asian shares retreated on Friday, after the biggest sell-off in US stocks since June on Thursday.

In terms of macro data, today Gold traders will be paying attention to the key US Non-Farm Payrolls report due out at 12:30 GMT. Employers in all segments of US economy, excluding the farming industry, probably added 1,400,000 new jobs in August, according to market expectations, after a job gain of 1,763,000 in July.

Additionally, the rate of unemployment in the country probably eased to 9.8% in August, according to estimates, from 10.2% in July.

“Gold is expected to be rangebound between $1,930 and $1,950 ahead of the non-farm payrolls report,” Stephen Innes, chief market strategist at AxiCorp, said.

“The reason for gold not sort of firing higher right now is because the dollar is picking up steam.”

As of 9:15 GMT on Friday Spot Gold was gaining 0.52% to trade at $1,940.68 per troy ounce, while moving within a daily range of $1,925.80-$1,942.30. The commodity was on track to register a weekly loss, being down 1.28%. The precious metal lost 0.42% in August, following four consecutive months of gains.

Meanwhile, Gold futures for delivery in December were edging up 0.44% on the day to trade at $1,946.25 per troy ounce, while Silver futures for delivery in December were up 0.61% to trade at $27.040 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 0.03% on Friday to 92.81, while staying not far from yesterday’s one-week high (93.07). The DXY was set to register its best weekly performance since mid-May, limiting upside for the yellow metal.

Meanwhile, near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of September 4th, 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 September 3rd.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,934.59
R1 – $1,947.27
R2 – $1,963.86
R3 – $1,976.54
R4 – $1,989.22

S1 – $1,917.99
S2 – $1,905.31
S3 – $1,888.72
S4 – $1,872.13