Commodity Market: Gold eases from a one-month peak, but on track for first weekly gain in three

Spot Gold eased from recent one-month high on Friday after a set of macro data coming out of China added to optimism over a swift recovery.

The latest data showed that factory gate prices in China had surged at the fastest yearly rate since July 2018 in March, while outstripping a consensus of estimates.

“Gold is facing some headwinds due to optimism around the recovery story as a result of strong data that has been coming out of the United States and China,” Ravindra Rao, vice
president, commodities at Kotak Securities, was quoted as saying by Reuters.

On the other hand, the precious metal has appreciated about 1% so far this week, snapping a two-week streak of losses.

“The (falling) dollar and Treasury yields have helped gold this week along with the Fed’s dovish tone, that has been topped with lockdowns in Europe and parts of Asia with some negative
vaccine results,” Brian Lan, managing director at GoldSilver Central, said.

Some analysts believe that a pick up in inflation this month may provide some support to Gold prices over the next several weeks, especially if the rate of increase exceeds that of bond yields.

As of 9:15 GMT on Friday Spot Gold was retreating 0.50% to trade at $1,746.76 per troy ounce, while moving within a daily range of $1,744.10-$1,757.43 per troy ounce. Yesterday it rose as high as $1,758.72 per troy ounce, which has been its strongest price level since March 1st ($1,759.95 per troy ounce). The precious metal looked set to register its first week of gains in three, being up 0.94%. Gold has risen 2.26% so far in April, following a 1.55% drop in March.

Meanwhile, Gold futures for delivery in June were retreating 0.68% on the day to trade at $1,746.20 per troy ounce, while Silver futures for delivery in May were down 1.34% to trade at $25.242 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 0.21% to 92.263 on Friday, while rebounding from yesterday’s over two-week low of 91.999.

In terms of macroeconomic data, today Gold traders will be expecting the March report on US producer prices due out at 12:30 GMT.

Near-term investor interest rate expectations were little changed. According to CME’s FedWatch Tool, as of April 9th, investors saw a 98.3% chance of the Federal Reserve keeping borrowing costs at the current 0%-0.25% level at its policy meeting on April 27th-28th, up from a 96.7% chance on April 8th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,749.20
R1 – $1,765.14
R2 – $1,774.66
R3 – $1,790.60
R4 – $1,806.54

S1 – $1,739.67
S2 – $1,723.73
S3 – $1,714.21
S4 – $1,704.68