Commodity Market: Gold not far from two-month highs, set for a third straight weekly gain as US bond yields, dollar retreat

Spot Gold traded within a narrow range on Friday, not far from yesterday’s two-month high, and was on track to register a third consecutive week of gains, as 10-year US bond yields and the US Dollar retreated on news US President Joe Biden intends to raise capital gains tax.

“The knock-on effect from the tax hike (proposal) is attracting bond investors and the yields have dropped, and this is providing a little bit of lift-off for gold,” Stephen
Innes, chief global market strategist at Axi, was quoted as saying by Reuters.

“The big question now facing gold markets is a decision on how the U.S. Federal Reserve is going to play next week.”

At the same time, in terms of physical demand, Gold shipments to India rose to a level not seen since 2013, while Switzerland’s Gold exports reached a ten-month peak.

As of 9:05 GMT on Friday Spot Gold was inching up 0.03% to trade at $1,784.73 per troy ounce, while moving within a daily range of $1,781.71-$1,789.79 per troy ounce. Yesterday it rose as high as $1,797.93 per troy ounce, which has been its strongest price level since February 25th ($1,805.53 per troy ounce).

The precious metal looked set to register its third straight week of gains, while being up 0.47%. Gold has risen 4.55% so far in April, following a 1.55% drop in March.

Meanwhile, Gold futures for delivery in June were edging up 0.13% on the day to trade at $1,784.25 per troy ounce, while Silver futures for delivery in May were down 0.30% to trade at $26.102 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 0.26% to 91.037 on Friday, while hovering just above Tuesday’s seven-week low of 90.856.

In terms of macroeconomic data, today Gold traders will be expecting the preliminary report on US manufacturing and services sector activity for April by Markit due out at 13:45 GMT as well as the March report on US new home sales due out at 14:00 GMT.

Near-term investor interest rate expectations were little changed. According to CME’s FedWatch Tool, as of April 23rd, investors saw a 96.1% 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 95.6% chance on April 22nd.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,786.54
R1 – $1,795.61
R2 – $1,807.00
R3 – $1,816.07
R4 – $1,825.14

S1 – $1,775.15
S2 – $1,766.08
S3 – $1,754.69
S4 – $1,743.30