Commodity Market: Gold on track for second week of losses, as vaccine optimism and stimulus uncertainty weigh

Spot Gold was on track to register its second straight week of losses, as reports of promising coronavirus vaccine results and uncertainty over Federal Reserve’s stimulus programmes weighed on demand for the precious metal.

In a letter, US Treasury Secretary Steven Mnuchin told Fed Chair Jerome Powell that $455 billion, allocated to the Treasury under the CARES Act, could be instead available for Congress to reallocate.

“If the Fed does start shrinking its assistance programme that could be a bit of headwind for gold again… The monetary debasement argument that has supported gold could weaken,” Lachlan Shaw, head of commodity research at National Australia Bank, was quoted as saying by Reuters.

On the other hand, according to Citi Research, a move for the yellow metal above the $2,000 threshold in 2021 still remains possible.

“Positive COVID-19 vaccine developments should slow but not end the secular gold bull cycle without a hawkish pivot in U.S. monetary policy,” Citi Research wrote in an investor note.

The latest results from AstraZeneca and Oxford University revealed that their potential COVID-19 vaccine had triggered a strong immune response in older adults.

As of 10:57 GMT on Friday Spot Gold was inching down 0.01% to trade at $1,865.79 per troy ounce, while moving within a daily range of $1,860.97-$1,869.86 per troy ounce. The yellow metal looked set for its second consecutive week of losses, being down 1.36%. The commodity has retreated 0.80% so far in November, following another 0.35% drop in October.

Meanwhile, Gold futures for delivery in December were edging up 0.23% on the day to trade at $1,865.70 per troy ounce, while Silver futures for delivery in December were up 0.91% to trade at $24.267 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 0.07% to 92.36 on Friday, while being not far from a two-week low of 92.21, registered earlier in the day.

Near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of November 20th, 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 December 15th-16th, or unchanged compared to November 19th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,864.34
R1 – $1,875.89
R2 – $1,885.67
R3 – $1,897.22
R4 – $1,908.77

S1 – $1,854.57
S2 – $1,843.02
S3 – $1,833.25
S4 – $1,823.47