Commodity Market: Gold poised for best week since late July as US Dollar plummets to a fresh two-month low

After surging more than 2% on Thursday amid post-election volatility and weaker US Dollar, Gold was mostly steady on Friday and was set to register its best weekly performance since late July due to prospects of more central bank support, as a divided US Congress under a Biden administration dimmed outlook for immediate fiscal stimulus.

“The U.S. election seems likely to give us a Democrat President and Republican Senate, maintaining the status quo on policy and that has allowed markets to get back to the real issue of 2020 – central bank easing on a huge scale,” Jeffrey Halley, senior market analyst at OANDA, said.

Yesterday the Federal Reserve kept the target range for the federal funds rate intact at 0%-0.25%, in line with market expectations, as policy makers took a wait-and-see approach amid election uncertainty.

Democrat Joe Biden moved a step closer to election victory, while votes in key states were still being counted.

According to IG Markets analyst Kyle Rodda, the yellow metal’s price dynamics has shifted from a stimulus hedge to a play on the US Dollar during the past week.

“Once we see the dust settle in the election it’s going to go back to being driven by fiscal policy,” IG Markets’ Rodda added.

As of 10:27 GMT on Friday Spot Gold was inching down 0.04% to trade at $1,948.89 per troy ounce, while moving within a daily range of $1,935.72-$1,950.79 per troy ounce. Yesterday it climbed to $1,952.79, or its strongest price level since September 21st ($1,955.62). The yellow metal looked set for its best weekly performance since the business week ended on July 31st, being up 3.72%.

Meanwhile, Gold futures for delivery in December were edging up 0.18% on the day to trade at $1,950.30 per troy ounce, while Silver futures for delivery in December were up 1.54% to trade at $25.580 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 0.20% to 92.45 on Friday, after earlier slipping as low as 92.44, its weakest level since September 2nd (92.21).

On today’s economic calendar, Gold traders will be paying attention to the October report on US Non-Farm Payrolls and unemployment rate due out at 13:30 GMT.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,934.92
R1 – $1,967.50
R2 – $1,985.37
R3 – $2,017.96
R4 – $2,050.54

S1 – $1,917.05
S2 – $1,884.46
S3 – $1,866.59
S4 – $1,848.72