Commodity Market: Gold set for first weekly decline in five, US Dollar set for first weekly gain in three on Fed taper prospects

Spot Gold rose for a second straight trading day on Friday, but was set to register its first loss in five weeks as the US Dollar was poised for its first weekly gain in three amid intensifying jitters over the Federal Reserve’s taper timeline.

“The overall backdrop for gold is much more bearish… We’re increasingly starting to hear from Fed officials a level of comfort in maybe announcing the taper formally at this month’s meeting,” DailyFX currency strategist Ilya Spivak was quoted as saying by Reuters.

“If the CPI number comes in on the hot side it will reinforce the sense that this might be the month.”

Earlier this week, several Fed officials said that decelerating job growth in August would not disrupt the central bank’s plans to scale back bond purchases this year. Yet, some noted that a final decision would require more data.

Potential tapering would reduce the precious metal’s appeal.

As of 9:07 GMT on Friday Spot Gold was edging up 0.42% to trade at $1,802.03 per troy ounce. Earlier in the week the commodity slipped as low as $1,782.47 per troy ounce, which has been its weakest price level since August 26th ($1,780.14).

Gold looked set to register its first loss out of five weeks, while being down 1.49%. The yellow metal has retreated 0.68% so far in September, following a rather flat performance in August.

Meanwhile, Gold futures for delivery in December were edging up 0.20% on the day to trade at $1,803.65 per troy ounce, while Silver futures for delivery in December were up 0.46% to trade at $24.288 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 0.08% to 92.445 on Friday. Earlier this week the DXY climbed as high as 92.862, which has been its strongest level since August 27th (93.181).

Near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of September 10th, 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 September 9th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,793.13
R1 – $1,802.35
R2 – $1,810.28
R3 – $1,819.51
R4 – $1,828.73

S1 – $1,785.20
S2 – $1,775.97
S3 – $1,768.04
S4 – $1,760.11