Commodity Market: Gold continues recovery as initial investor COVID-19 vaccine-related euphoria fades, Fed Minutes now eyed

Gold continued its recovery from recent lows on Wednesday, as market sentiment once again went into a risk-off mode. Tuesday’s investor optimism cooled off after medical website Stat News reported that early data on Moderna Inc’s experimental COVID-19 vaccine was not sufficient to determine if the vaccine itself was effective. Moderna announced earlier this week that its vaccine candidate had produced protective antibodies in a small group of healthy individuals who volunteered for the testing.

Additionally, the yellow metal and other safe haven assets have drawn support from a cannonade of bleak macroeconomic data released this month, including a startling loss of jobs and record rates of decrease in homebuilding activity, retail sales and industrial production in the United States as well as decelerating inflation in the UK and the Euro area.

At 9:24 GMT today Spot Gold was gaining 0.25% to trade at $1,749.10 per troy ounce, after touching an intraday high of $1,753.21, or a price level not seen since May 18th ($1,765.26). Meanwhile, Gold futures for delivery in June were gaining 0.44% on the day to trade at $1,753.35 per troy ounce, while Silver futures for delivery in July were up 0.51% to trade at $17.992 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was retreating 0.17% on Wednesday to 99.41, after earlier touching an intraday low of 99.35.

Today gold traders will be expecting the minutes from the Federal Open Market Committee’s meeting on policy held on April 28th-29th. The Federal Reserve kept its target range for the federal funds rate intact at 0%-0.25% last month, while reiterating its commitment to use the entire range of tools to support pandemic-hit economy. The central bank said the scope and eligibility for the Main Street Lending Program would be expanded. The minutes will be released at 18:00 GMT.

During his testimony before the Senate Banking, Housing, and Urban Affairs Committee on Tuesday, Fed Chair Jerome Powell said that the central bank intended to ensure access to credit facilities for more borrowers, including less populated US states.

“What the Fed does in the next few months will be pretty important, and certainly Powell did indicate that the rates would remain near zero for foreseeable future,” ANZ analyst Daniel Hynes wrote.

Meanwhile, near-term interest rate expectations were little changed. According to CME’s FedWatch Tool, as of May 20th, investors saw a 93.6% chance of the Federal Reserve keeping borrowing costs at the current 0%-0.25% level at its policy meeting in June, compared with a 94.3% probability a day ago.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,739.75
R1 – $1,752.88
R2 – $1,760.99
R3 – $1,774.11
R4 – $1,787.24

S1 – $1,731.64
S2 – $1,718.52
S3 – $1,710.41
S4 – $1,702.30

Gold is expected to rally some more, as is suggested by the RSI and the MACD, with immediate resistance being at today’s high of $1,753.21 and then, at the R2 pivot level of $1,760.99. A break above it may expose the high from May 18th ($1,765.26). Support may be expected at the 20-period EMA ($1,746.00) and then, at the S1 pivot level of $1,731.64. A break below it may expose the low from May 19th ($1,726.62).