Commodity Market: Gold slips from resistance area, but geopolitical tensions, virus spread may limit losses

Having faced strong resistance in the area near July 8th high ($1,818.09) during the past several trading days, Gold briefly eased below the $1,800 mark on Tuesday as the US Dollar regained strength, making the yellow metal costlier for holders of other currencies. Still, geopolitical tensions and worsening COVID-19 situation in the United States and elsewhere were likely to limit Gold losses.

Diplomatic tensions between Beijing and Washington escalated due to disputed claims to offshore resources across the South China Sea. The US said China’s claims were “unlawful.”

Additionally, investor risk appetite was curbed on reports that the Trump administration intended to soon end an agreement between China and US auditing authorities from 2013. Such a move could portend a broader crackdown on Chinese companies listed on US stock exchanges that are under fire for eschewing US disclosure rules.

The United States is also moving closer to end Hong Kong’s special legal status following China’s new security legislation for the former British colony.

Deepening coronavirus crisis in the US, Brazil, India and elsewhere still remained a source of concerns. Latest data by the Center for Systems Science and Engineering at Johns Hopkins University showed total confirmed COVID-19 cases globally had already exceeded 13 million, while the illness had caused the death of more than 569,000 people.

California Governor Gavin Newsom announced new restrictions on businesses on Monday, as new coronavirus infections and hospitalizations across the nation’s most populous state surged.

As of 9:13 GMT on Tuesday Spot Gold was edging down 0.12% to trade at $1,800.14 per troy ounce, while moving within a tight daily range of $1,795.99-$1,803.20. Last week the precious metal rose 1.32%, while marking its fifth successive week of gains.

Meanwhile, Gold futures for delivery in August were losing 0.61% on the day to trade at $1,803.00 per troy ounce, while Silver futures for delivery in September were down 2.13% to trade at $19.367 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 0.16% on Tuesday to 96.68, rebounding from a nearly one-month low registered on July 9th.

Today Gold traders will be paying attention to the monthly report on US CPI inflation at 12:30 GMT. The annualized consumer inflation in the country probably accelerated to 0.6% in June, according to market expectations, from 0.1% in May. At the same time, the annualized core consumer inflation is expected to slow down to 1.1% in June from 1.2% in May.

Meanwhile, near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of July 14th, 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 13th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,804.64
R1 – $1,811.17
R2 – $1,820.00
R3 – $1,826.53
R4 – $1,833.06

S1 – $1,795.81
S2 – $1,789.29
S3 – $1,780.46
S4 – $1,771.63