Commodity Market: Gold eases from over 8 1/2-year highs as investors move into safe haven dollar, poised for fifth straight weekly gain

Gold prices eased from highs last seen in September 2011, but still kept ground above the $1,800 mark on Friday, as market players favored the US Dollar as a safe haven asset amid a record surge in daily new COVID-19 cases in the United States that curbed optimism over a swift recovery.

The latest data showed new confirmed COVID-19 cases in the United States had risen by more than 60,000, or the largest count in a single day registered by any country since the start of the pandemic. On a global scale, the total confirmed cases of the illness have already surpassed 12.2 million, while the death toll exceeded 550,000, according to data by Johns Hopkins University.

Tensions between Beijing and Washington also dampened risk sentiment. Reports emerged that the United States was preparing a federal contract ban on companies that utilize Huawei technology. Additionally, charges were brought against several Chinese officials on allegations of human rights abuses in Xinjiang province.

The yellow metal has been drawing support from the prospect of more stimulus measures being introduced by central banks across the globe, as it has risen more than 24% since its 2020 low of $1,451.43 registered in mid-March.

“These stimulus (measures) are not going away very soon. If we see the global supply chain, it has been massively disrupted and that disruption adds to inflation as well,” Ryan McKay, commodity strategist at TD Securities, said.

As of 9:08 GMT on Friday Spot Gold was edging up 0.19% to trade at $1,806.86 per troy ounce, while moving within a tight daily range of $1,796.03-$1,807.05. On Wednesday it surged to $1,818.09, or its strongest level since September 19th 2011 ($1,828.05). The precious metal was set to register its fifth successive week of gains, currently being up 1.61%.

Meanwhile, Gold futures for delivery in August were gaining 0.52% on the day to trade at $1,813.25 per troy ounce, while Silver futures for delivery in September were up 0.77% to trade at $19.108 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 0.05% on Friday to 96.83, rebounding from Thursday’s nearly one-month low of 96.24.

Today Gold traders will be paying attention to the monthly report on US producer prices at 12:30 GMT. Annual producer prices probably dropped 0.2% in June, according to market expectations, following a 0.8% slump in May.

Meanwhile, near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of July 10th, 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 July 9th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,805.06
R1 – $1,814.39
R2 – $1,825.39
R3 – $1,834.72
R4 – $1,844.04

S1 – $1,794.06
S2 – $1,784.73
S3 – $1,773.73
S4 – $1,762.72

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