Commodity Market: Gold hits a fresh record high as pandemic-related concerns bolster the metal’s safe haven appeal

Spot Gold rose to a fresh record high during early Asian trade on Monday, as concerns over an economic impact from the accelerating COVID-19 pandemic drove inflows into haven assets. Still, a rebound in the US Dollar was limiting the yellow metal’s advance.

“The sentiment across markets is deteriorating. First of all, rising infection rates are a real concern for the globe and a real support for gold prices. Given that, it is also driving U.S. dollar higher,” Michael McCarthy, chief strategist at CMC Markets, said.

The latest data by the Center for Systems Science and Engineering at Johns Hopkins University showed total confirmed COVID-19 cases had already surpassed 18.082 million worldwide, with US cases now exceeding 4.667 million. Global death toll has surpassed 689,000, with more than 154,000 deaths reported in the United States alone.

“Gold also saw safe-haven demand as the federal unemployment bonus expired on Friday, which would affect U.S. consumer income and spending and the U.S. Central Bank would thus remain dovish,” Phillip Futures analysts wrote in an investor note.

Concerns over US outlook mounted after policy makers did not manage to reach an agreement on providing additional stimulus for the coronavirus-ravaged economy. White House Chief of Staff Mark Meadows said over the past weekend that he was skeptical about reaching a near-term agreement on a coronavirus relief bill.

Gold and other safe haven assets have also received support due to escalating tensions between the United States and China on geopolitical, trading and technological fronts.

As of 9:22 GMT on Monday Spot Gold was edging down 0.10% to trade at $1,973.93 per troy ounce, after earlier touching an intraday high of $1,986.77, a fresh all-time high. The precious metal advanced 10.95% in July, while marking its fourth consecutive month of gains and also the best monthly performance since January 2012.

Meanwhile, Gold futures for delivery in October were edging up 0.33% on the day to trade at $1,980.45 per troy ounce, while Silver futures for delivery in September were up 1.17% to trade at $24.500 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 0.13% on Monday to 93.58, after slipping as low as 92.55 last Friday, or its weakest level since May 14th 2018 (92.24).

Today Gold traders will be paying attention to the monthly report on US manufacturing sector conditions by the Institute for Supply Management at 14:00 GMT. Activity in United States’ manufacturing industry probably expanded for a second consecutive month in July, with the respective Purchasing Managers’ Index coming in at a reading of 54.0, according to market expectations. In June, the gauge was reported at 52.6.

Meanwhile, near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of August 3rd, 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 September 15th-16th, or unchanged compared to July 31st.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,971.47
R1 – $1,987.59
R2 – $1,999.23
R3 – $2,015.35
R4 – $2,031.48

S1 – $1,959.84
S2 – $1,943.71
S3 – $1,932.08
S4 – $1,920.45