Commodity Market: Gold steadies near 92 1/2-month highs on virus-related concerns, geopolitics, Fed Chair Powell’s testimony now in focus

Gold traded within a narrow range close to 92 1/2-month highs in Europe on Tuesday, as the speeding up spread of the coronavirus globally dented hopes of a swift economic recovery.

Total confirmed cases of the COVID-19 illness have exceeded 10.3 million globally, while in the United States alone confirmed cases are now over 2.64 million. Because of the huge number of new COVID-19 infections, California closed bars over the weekend, following the example of states such as Texas and Florida, while Washington state postponed re-opening plans.

“The uptick in coronavirus cases right now across most parts of the United States has got the markets on edge right now, supporting gold,” Bob Haberkorn, senior market strategist at RJO Futures, said. “There’s been a flight to safety into gold since last week…”

Another Gold-supporting factor included escalating geopolitical tensions, after China’s National People’s Congress Standing Committee passed national security legislation for Hong Kong and Macau. Details of the law, which is aimed to deal with subversion, terrorism, separatism and collusion with foreign forces, will be announced later today. The legislation is largely seen as potentially suppressing freedoms in the Asian financial hub.

“It marks the end of Hong Kong that the world knew before,” pro-democracy activist Joshua Wong said in a tweet.

As of 9:35 GMT on Tuesday Spot Gold was inching down 0.10% to trade at $1,770.90 per troy ounce, while moving within a daily range of $1,768.84-$1,773.86. Still, it was in proximity to last Wednesday’s multi-month high of $1,779.45. The yellow metal was poised to register its best quarterly performance since 2016 in Q2, being up nearly 12%.

Meanwhile, Gold futures for delivery in August were gaining 0.07% on the day to trade at $1,782.50 per troy ounce, while Silver futures for delivery in September were up 0.08% to trade at $18.078 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 0.25% on Tuesday to 97.71, after earlier climbing as high as 97.73, or a level not seen since June 22nd (97.74).

Today Gold traders will be paying attention to a testimony by Federal Reserve Chair Jerome Powell and US Treasury Secretary Steven Mnuchin before the House of Representatives Financial Services Committee at 16:30 GMT for clues on additional stimulus measures. It will be preceded by a speech by Fed President for New York John Williams at the live-streamed Institute of International Finance “Central Banking in the Age of Covid-19” Summit at 15:00 GMT.

Additionally, markets will be also expecting data prints such as the Chicago manufacturing activity report at 13:45 GMT and Conference Board’s report on US consumer confidence at 14:00 GMT.

Meanwhile, near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of June 30th, 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 29th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,771.43
R1 – $1,776.91
R2 – $1,781.18
R3 – $1,786.66
R4 – $1,792.15

S1 – $1,767.17
S2 – $1,761.68
S3 – $1,757.42
S4 – $1,753.15

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