Commodity Market: Gold heads for fourth week of losses ahead of US November CPI inflation report

Spot Gold was heading for its fourth consecutive week of losses and the US Dollar firmed as market players were cautious ahead of the key US CPI inflation data for November, scheduled to be released at 13:30 GMT today.

A high inflation reading could urge the Federal Reserve policy makers, which are to hold a meeting next week, to begin tapering monetary stimulus and to consider raising interest rates sooner than expected. A consensus of analyst estimates points to a 6.8% year-on-year increase in US consumer prices in November.

“The focus is on the inflation data and if we will get a strong print then the dollar should appreciate, bond yields should rise, maybe stock markets could rise as well, but the gold price will probably be down in response to it,” Commerzbank analyst Daniel Briesemann was quoted as saying by Reuters.

However, “there’s still enough uncertainty around the Omicron variant, which could delay rate hiking cycles, to support gold,” according to Stephen Innes, managing partner at SPI Asset Management.

As of 11:22 GMT on Friday Spot Gold was edging down 0.18% to trade at $1,772.04 per troy ounce. Earlier in the trading session the yellow metal slipped as low as $1,770.21 per troy ounce, which has been its weakest price level since December 3rd ($1,766.21 per troy ounce).

The commodity looked set to register its fourth consecutive week of losses, while being down 0.73%. The precious metal has dipped 0.22% so far in December, following another 0.49% drop in November.

Meanwhile, Gold futures for delivery in February 2022 were edging down 0.31% on the day to trade at $1,771.20 per troy ounce, while Silver futures for delivery in March 2022 were down 0.63% to trade at $21.875 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 up 0.14% to 96.337 on Friday. The DXY extended a rebound from a one-week low of 95.849, which it registered on December 8th.

Near-term investor interest rate expectations were little changed. According to CME’s FedWatch Tool, as of December 10th, investors saw a 98.9% chance of the Federal Reserve keeping borrowing costs at the current 0%-0.25% level at its policy meeting on December 14th-15th, compared to a 100.0% chance on December 9th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,778.76
R1 – $1,784.22
R2 – $1,793.12
R3 – $1,798.58
R4 – $1,804.03

S1 – $1,769.86
S2 – $1,764.40
S3 – $1,755.50
S4 – $1,746.59