Commodity Market: Gold eases after biggest gain in 1 1/2-weeks on profit-taking, Fed Chair Powell’s annual symposium speech in focus

Spot Gold edged lower on Thursday, after recording its biggest single-day gain since August 17th on Wednesday, due to some profit-taking ahead of a highly anticipated speech by Federal Reserve Chair Jerome Powell at the annual economic policy symposium later in the day.

“It was a pretty significant rally overnight on pretty limited news. The thinner Asian trading session has seen punters pull profits,” IG Markets analyst Kyle Rodda, said.

“Gold bulls will be hoping, in a way, that the stars align a bit: that Powell outlines the Fed’s pivot to inflation targeting, and expresses an openness to keep long term rates low, ideally through a new yield-curve control program,” Rodda added.

The Fed Chair is scheduled to speak at the annual central bankers’ virtual conference at 13:10 GMT. Investors are speculating that Powell may indicate the Fed will soften its inflation target to allow monetary policy to remain accommodative for a longer period of time.

An environment of low interest rates and unprecedented monetary stimulus has supported Gold, with the safe haven metal’s year-to-date gain being over 28%.

“Gold should find willing buyers on dips to $1,935 an ounce. Overall, we expect gold to trade in a choppy $1,935-$1,970 range ahead of Powell’s speech,” Jeffrey Halley, a senior market analyst at OANDA, said.

As of 9:15 GMT on Thursday Spot Gold was losing 0.56% to trade at $1,943.15 per troy ounce, while moving within a daily range of $1,937.13-$1,954.81. The precious metal has retreated 1.75% so far in August, after four consecutive months of gains.

Meanwhile, Gold futures for delivery in December were edging down 0.18% on the day to trade at $1,949.00 per troy ounce, while Silver futures for delivery in September were down 0.20% to trade at $27.395 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 down 0.04% on Thursday to 92.85, after earlier slipping as low as 92.79, or its weakest level since August 21st (92.58).

In terms of macro data, today Gold traders will be paying attention to the second US GDP estimate for Q2, scheduled to be reported at 12:30 GMT. It may show that economy contracted at an annualized rate of 32.5% during the second quarter, according to market consensus.

A separate report at 12:30 GMT by the US Labor Department may show the number of people in the country, who filed for unemployment assistance for the first time during the business week ended August 21st, probably eased to 1,000,000, according to expectations, from 1,106,000 in the preceding week.

Meanwhile, near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of August 27th, 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 August 26th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,937.17
R1 – $1,971.61
R2 – $1,989.18
R3 – $2,023.62
R4 – $2,058.07

S1 – $1,919.59
S2 – $1,885.15
S3 – $1,867.58
S4 – $1,850.00