Commodity Market: Gold set for fifth loss in six months due to stronger US Dollar, focus remains on US stimulus deal

Spot Gold traded within a narrow range on Friday and looked set to register its fifth loss out of six months amid lack of proper catalysts to support prices, while the US Dollar strengthened.

The dollar has gained more than 0.8% against a basket of major peers so far in January, supported by higher US bond yields and concerns that US coronavirus relief package could be smaller than the $1.9 trillion stimulus, proposed by the Biden administration.

“Dollar has become the current safe-haven favorite,” Phillip Futures analysts wrote in an investor note.

“The short-term fundamentals have currently turned unfavorable towards gold as dollar strengthened because of unwinding stocks bets in the U.S.,” they added.

A stronger dollar makes Gold more expensive for international investors holding other currencies.

Any delays in getting the stimulus package passed could also hurt Gold, analysts warned.

As of 9:40 GMT on Friday Spot Gold was edging up 0.35% to trade at $1,849.10 per troy ounce, while moving within a daily range of $1,839.65-$1,854.35 per troy ounce. The commodity has retreated 0.34% so far this week and also looked set for a monthly loss, while being down 2.58% so far in January.

Meanwhile, Gold futures for delivery in April were gaining 0.58% on the day to trade at $1,851.90 per troy ounce, while Silver futures for delivery in March were up 3.61% to trade at $26.858 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 0.26% to 90.69 on Friday, while being not far from Wednesday’s one-week high of 90.88.

In terms of macroeconomic data, today Gold traders will be paying attention to the December report on US personal income, personal spending and Core PCE inflation due out at 13:30 GMT as well as to the December data on pending home sales due out at 15:00 GMT.

Additionally, several Federal Reserve officials are scheduled to make speeches.

Near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of January 29th, 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 March 16th-17th, or unchanged compared to January 28th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,847.00
R1 – $1,859.88
R2 – $1,877.09
R3 – $1,889.97
R4 – $1,902.84

S1 – $1,829.79
S2 – $1,816.91
S3 – $1,799.70
S4 – $1,782.48