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Commodity Market: Gold set for first weekly advance in four as US Dollar pulls back, US PCE inflation data now in focus

Spot Gold rose on Friday and was on track to register its first gain in four weeks, since the US Dollar pulled back from last week’s more than two-month peak, while there have been mixed signals from Federal Reserve officials in regard to the bank’s policy outlook.

Markets are also expecting the key data on US Core PCE Price Index, the Fed’s preferred measure of inflation, due out later on Friday.

On Wednesday two Federal Reserve officials warned that a period of high inflation could last longer than originally expected.

“Temporary is going to be a little longer than we expected initially … Rather than it being two to three months it may be six to nine months,” Atlanta Fed President Raphael Bostic told NPR.

He also said he now projected that interest rates would have to be raised in late 2022.

At the same time, Fed Governor Michelle Bowman said during a Cleveland Federal Reserve Bank conference that price surges were being caused by clogged supply chains and rising demand amid economic re-opening, but “it could take some time” for those factors to abate.

On the other hand, a day earlier, Fed Chair Jerome Powell said during a congressional testimony that inflation might not be the only factor to determine interest rate decisions.

“Gold has really struggled to rebound convincingly this week. The market is struggling for a conviction or direction in the U.S. dollar,” Stephen Innes, managing partner at SPI Asset Management, was quoted as saying by Reuters.

“The gold market continues to consolidate around these levels until the data comes out. The Feds are in no rush to raise rates and there would be enough inflation in the market to support gold,” Innes added.

As of 9:02 GMT on Friday Spot Gold was gaining 0.43% to trade at $1,782.57 per troy ounce. Last week the metal slipped as low as $1,761.04 per troy ounce, which has been its weakest price level since April 29th ($1,756.13 per troy ounce).

Gold was on track to register its first weekly gain in four, while being up 1.07%. The yellow metal has retreated 6.48% so far in June, following a 7.60% surge in May.

Meanwhile, Gold futures for delivery in August were gaining 0.35% on the day to trade at $1,782.95 per troy ounce, while Silver futures for delivery in July were up 0.91% to trade at $26.288 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 0.07% to 91.743 on Friday. Last week the DXY rose as high as 92.405, which has been its strongest level since April 9th (92.413).

In terms of macroeconomic data, today Gold traders will be paying attention to the May report on US personal income, personal spending and Core PCE inflation due out at 12:30 GMT as well as to the final data on US consumer sentiment for June due out at 14:00 GMT.

Near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of June 25th, 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 27th-28th, or unchanged compared to June 24th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,778.63
R1 – $1,784.39
R2 – $1,793.80
R3 – $1,799.55
R4 – $1,805.31

S1 – $1,769.22
S2 – $1,763.47
S3 – $1,754.06
S4 – $1,744.65

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