Commodity Market: Gold stuck in a tight range as USD steadies, markets expect Fed Chair Powell’s testimony before Congressional committees

Spot Gold was trading within a narrow range in Europe on Monday, as the US Dollar steadied after touching a 1 1/2-week low, while market players’ focus now sets on a plethora of speeches by Federal Reserve officials this week for further clues on the bank’s policy framework shift.

Federal Reserve Chair Jerome Powell is expected to testify with Treasury Secretary Steven Mnuchin before the House Financial Services Committee on Tuesday, followed by a testimony before the House of Representatives’ Select Subcommittee on the Coronavirus Crisis on Wednesday and a testimony before the Senate Banking Committee on Thursday.

“The focus on Jerome Powell will be how much he is going to try to sway the Senate to provide more stimulus,” Stephen Innes, chief market strategist at AxiCorp, said.

An expansion of US stimulus could weaken the US Dollar further and provide support for Gold. Unprecedented stimulus measures by central banks and governments across the globe have led to a 28.7% surge in Gold prices so far this year.

According to Innes, however, the yellow metal may have a hard time reaching the $2,000 mark again in 2020, as macroeconomic environment improves and benefits of a potential coronavirus vaccine come into play.

As of 8:18 GMT on Monday Spot Gold was edging down 0.25% to trade at $1,945.70 per troy ounce, while moving within a daily range of $1,944.84-$1,955.62. Last week the commodity rose as high as $1,973.78, its strongest level since September 1st. The precious metal has dropped 1.24% so far in September, following a 0.42% loss in August.

Meanwhile, Gold futures for delivery in December were losing 0.42% on the day to trade at $1,953.90 per troy ounce, while Silver futures for delivery in December were down 1.29% to trade at $26.780 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 Monday to 93.03, after earlier slipping as low as 92.75, or its weakest level since September 10th (92.70).

Near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of September 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 November 4th-5th, or unchanged compared to September 18th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,951.60
R1 – $1,959.04
R2 – $1,967.58
R3 – $1,975.03
R4 – $1,982.48

S1 – $1,943.06
S2 – $1,935.61
S3 – $1,927.07
S4 – $1,918.53