Commodity Market: Gold set for first weekly loss in four as robust US macro data bolster US bond yields

Spot Gold was a notch weaker on Friday and looked set to register its first weekly loss in the past four weeks, as robust US macro data drove bond yields higher, increasing the opportunity cost of holding Gold which generates no interest.

Still, the commodity was on track to post its first monthly gain this year, being up 3.75%.

10-year US bond yields rose and remained in proximity to over two-week highs after the latest macro data string showed US GDP growth had picked up during the first quarter, with the massive fiscal stimulus underpinning consumer spending.

“This string of consecutively strong U.S. economic data is weighing on gold,” Stephen Innes, managing partner at SPI Asset Management, was quoted as saying by Reuters.

Yet, according to Innes, the commodity “remains bid, it is just not a strong hand right now, because of the month-end rebalancing.”

“Ongoing strength in domestic data should lead to an incrementally hawkish turn in Fed guidance over the coming months,” UBS analysts wrote in an investor note, as they expect Gold to retreat to $1,600 per troy ounce by the end of 2021.

On Wednesday the Federal Reserve left policy settings without change, in line with market expectations.

As of 9:05 GMT on Friday Spot Gold was edging down 0.14% to trade at $1,769.51 per troy ounce, while moving within a daily range of $1,765.51-$1,773.74 per troy ounce. Yesterday it slipped as low as $1,756.13 per troy ounce, which has been its weakest price level since April 15th ($1,734.49 per troy ounce).

The precious metal looked set to register its first weekly loss in four weeks, while being down 0.44%.

Meanwhile, Gold futures for delivery in June were inching up 0.07% on the day to trade at $1,769.50 per troy ounce, while Silver futures for delivery in May were down 0.11% to trade at $26.025 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 0.13% to 90.750 on Friday, while hovering just above Thursday’s two-month low of 90.424.

In terms of macroeconomic data, today Gold traders will be paying attention to the March 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 April due out at 14:00 GMT.

Near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of April 30th, investors saw an 88.0% chance of the Federal Reserve keeping borrowing costs at the current 0%-0.25% level at its policy meeting on June 15th-16th, or unchanged compared to April 29th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,772.72
R1 – $1,789.31
R2 – $1,806.62
R3 – $1,823.21
R4 – $1,839.80

S1 – $1,755.41
S2 – $1,738.82
S3 – $1,721.51
S4 – $1,704.20