Commodity Market: Gold hits a fresh 11 1/2-week high on weaker dollar, pullback in bond yields ahead of key NFP data

Spot Gold extended gains to an 11 1/2-week high on Friday and was also set to register its best weekly performance in six months, as the US Dollar was hovering near a one-week low and 10-year US government bond yields were near a two-week low ahead of the key US Non-Farm Payrolls data due out later in the day.

“The weaker dollar and U.S. Treasury yields dropping below 1.6% has helped gold prices to go above $1,800,” Brian Lan, managing director at GoldSilver Central, was quoted as saying by Reuters.

“The U.S. jobs data is very important point … if data comes out really good, we can see people being more positive on the economy and it might lead to Federal Reserve increasing the interest rates earlier than expected, which will impact gold.”

The Fed President for Cleveland Loretta Mester said that while the outlook for economy was brightening, more improvements were required before the central bank begins to tighten policy.

As of 8:55 GMT on Friday Spot Gold was edging up 0.33% to trade at $1,821.05 per troy ounce, after earlier touching an intraday high at $1,823.19, which has been its strongest price level since February 16th ($1,826.50 per troy ounce).

The precious metal was on track to register its biggest weekly gain since early December, while being up 2.83%.

Meanwhile, Gold futures for delivery in June were edging up 0.40% on the day to trade at $1,822.95 per troy ounce, while Silver futures for delivery in July were up 0.13% to trade at $27.512 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 0.11% to 90.797 on Friday, while hovering just above a one-week low of 90.751.

In terms of macroeconomic data, today market players will be paying attention to the April report on US Non-Farm Payrolls, Unemployment Rate and Average Hourly Earnings due out at 12:30 GMT. Employers in all sectors of US economy, except the farming industry, probably added 978,000 new jobs last month, according to a consensus of analyst estimates.

The number of people filing for unemployment benefits for the first time last week dropped to a 13-month trough, the official government data showed.

Near-term investor interest rate expectations were little changed. According to CME’s FedWatch Tool, as of May 7th, investors saw an 89.0% chance of the Federal Reserve keeping borrowing costs at the current 0%-0.25% level at its policy meeting on June 15th-16th, up from 88.0% on May 6th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,805.09
R1 – $1,828.12
R2 – $1,841.17
R3 – $1,864.21
R4 – $1,887.24

S1 – $1,792.04
S2 – $1,769.00
S3 – $1,755.96
S4 – $1,742.92