Commodity Market: Gold set for monthly gain, analysts expect a slight rally by year end

Spot Gold rose for a fourth straight trading day on Friday and looked set to register a monthly gain, as the US Dollar hovered just above a one-month low, making the precious metal less expensive for holders of other currencies.

A recent poll by Reuters showed that Gold prices were expected to rise a little bit above the current levels for the rest of 2021 before easing in 2022, as global recovery gains traction and central banks start tightening monetary policy.

“Safe-haven demand should fade further as global growth recovers and inflation turns out to be temporary,” Julius Baer analyst Carsten Menke was quoted as saying by Reuters.

Possible rate hikes by central banks would also make Gold less appealing, as this would bolster government bond yields. The yellow metal is a non-yielding asset.

According to poll results, Gold prices are expected to average $1,835 per troy ounce during the third quarter of 2021 and $1,841 per troy ounce during the fourth quarter. For the full 2021, Gold prices are expected to average $1,812 per troy ounce, while in 2022 prices will average $1,785 per troy ounce.

As of 8:37 GMT on Friday Spot Gold was edging up 0.11% to trade at $1,829.90 per troy ounce. Yesterday the yellow metal rose as high as $1,832.73 per troy ounce, which has been its strongest price level since July 15th ($1,834.19 per troy ounce).

Gold was on track to register a monthly gain, while being up 3.31%, following a 7.14% loss in June.

Meanwhile, Gold futures for delivery in August were edging down 0.15% on the day to trade at $1,828.40 per troy ounce, while Silver futures for delivery in September were down 0.52% to trade at $25.648 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 down 0.01% to 91.871 on Friday. Earlier in the session the DXY slipped as low as 91.851, which has been its weakest level since June 28th (91.699).

In terms of macroeconomic data, today Gold traders will be paying attention to the June report on US personal income, personal spending and Core PCE inflation due out at 12:30 GMT as well as to the final data on US consumer sentiment for July due out at 14:00 GMT.

Near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of July 30th, 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 September 21st-22nd, or unchanged compared to July 29th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,822.53
R1 – $1,838.17
R2 – $1,848.37
R3 – $1,864.01
R4 – $1,879.65

S1 – $1,812.34
S2 – $1,796.70
S3 – $1,786.50
S4 – $1,776.31