Commodity Market: Gold hits highs unseen since October 2012 as concerns over second COVID-19 wave support demand

Gold surged for a fourth straight trading day on Wednesday, while reaching highs not seen since early October 2012, as new confirmed cases of the COVID-19 illness continued to rise globally, which could lead to more stimulus measures in support of economy.

Daily new coronavirus infections globally rose by nearly 163,000 on Tuesday. As of June 24th, global confirmed cases have exceeded 9.369 million, while the death toll has surpassed 480,000.

US states such as Texas, Arizona and Nevada reported record COVID-19 infections for a second week, while other 10 states saw new infections rising. At the same time, the death toll in Latin America reportedly exceeded 100,000 on Tuesday.

“The fears of second wave cases particularly in the U.S., and also in Latin America is driving concerns about sustained weakness in the economic recovery and that’s certainly supporting safe-haven assets like gold,” ANZ analyst Daniel Hynes said.

“Continued support that central banks are likely to provide to the market with bond purchasing programs and monetary easing will clearly keep the rates low for the foreseeable future.”

Central bank stimulus measures tend to support Gold, as the yellow metal is largely considered as a hedge against inflation. Gold has surged almost 22% since its 2020 low registered in mid-March.

As of 9:34 GMT on Wednesday Spot Gold was gaining 0.50% to trade at $1,776.52 per troy ounce, after earlier touching an intraday high of $1,777.41, or a price level not seen since October 9th 2012 ($1,779.82). Meanwhile, Gold futures for delivery in August were gaining 0.60% on the day to trade at $1,792.75 per troy ounce, while Silver futures for delivery in July were up 0.06% to trade at $18.073 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 0.07% on Wednesday to 96.75, attempting a rebound from yesterday’s two-week low of 96.39.

Today Gold traders will be paying attention to any policy- or economic outlook-related remarks by two Fed officials. At 16:30 GMT Federal Reserve President for Chicago Charles Evans is expected to participate in Corridor Business Journal Mid-Year Economic Review virtual presentation, while at 19:00 GMT Fed President for St. Louis James Bullard is scheduled to speak on “COVID-19 and the Economy” before the Greater Louisville Inc. – The Metro Chamber of Commerce via webcast.

Meanwhile, near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of June 24th, 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 July 28th-29th, or unchanged compared to June 23rd.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,762.08
R1 – $1,776.59
R2 – $1,785.45
R3 – $1,799.96
R4 – $1,814.47

S1 – $1,753.21
S2 – $1,738.70
S3 – $1,729.83
S4 – $1,720.97

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