Commodity Market: Gold rebounds from a six-week low on softer US Dollar, Evergrande’s debt concerns bolster safe-haven demand

Spot Gold rebounded from a six-week low on Friday, as concerns over indebted property developer China Evergrande supported demand for the safe-haven metal, while the US Dollar eased from recent one-month highs.

“Asian investors could be building gold to protect against undesirable developments in the Evergrande saga over the weekend,” Jeffrey Halley, a senior market analyst for Asia Pacific at OANDA, said.

However, the yellow metal looked set to register another week of losses following Federal Reserve’s indication of an earlier-than-anticipated rate hike and after Bank of England said yesterday the case for higher interest rates “appeared to have strengthened.”

A rate hike would increase the opportunity cost of holding non-yielding Gold.

“With global central banks pretty much committing now to a dynamic taper that brings forward rate hikes and that should ultimately be negative for gold,” Stephen Innes, managing partner at SPI Asset Management, was quoted as saying by Reuters.

As of 9:55 GMT on Friday Spot Gold was gaining 0.69% to trade at $1,754.35 per troy ounce. Earlier in the week the commodity slipped as low as $1,737.84 per troy ounce, which has been its weakest price level since August 11th ($1,724.20).

Gold looked set to register its third straight week of losses, while being down 0.10%. The yellow metal has retreated 3.23% so far in September, following a rather flat performance in August.

Meanwhile, Gold futures for delivery in December were edging up 0.27% on the day to trade at $1,754.55 per troy ounce, while Silver futures for delivery in December were down 0.12% to trade at $22.652 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 up 0.09% to 93.168 on Friday. In the previous trading session, the DXY climbed as high as 93.524, which has been its strongest level since August 20th (93.729).

Near-term investor interest rate expectations were little changed. According to CME’s FedWatch Tool, as of September 24th, investors saw a 97.9% chance of the Federal Reserve keeping borrowing costs at the current 0%-0.25% level at its policy meeting on November 2nd-3rd, compared to a 100% chance on September 23rd.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,752.26
R1 – $1,766.68
R2 – $1,791.06
R3 – $1,805.48
R4 – $1,819.90

S1 – $1,727.89
S2 – $1,713.47
S3 – $1,689.09
S4 – $1,664.72