Commodity Market: Gold extends losses as US Dollar touches a one-week high on Fed taper talk

Spot Gold retreated for a second straight trading day on Friday, as the US Dollar held close to one-week highs ahead of the highly anticipated US Non-Farm Payrolls report. Meanwhile, more Federal Reserve officials indicated that the central bank could taper its asset-purchasing program sooner than expected.

Fed Governor Christopher Waller said earlier this week that it could be possible for the central bank to begin policy tightening sooner than expected due to observed progress in economic recovery and labor market improvement.

At the same time, Fed President for Minneapolis Neel Kashkari said the Delta variant of the coronavirus could throw a “wrinkle” into the labor market recovery and the timeline for tapering asset purchases.

The United States reported over 100,000 new daily COVID-19 infections, a six-month high.

In other news, India’s July gold imports more than doubled compared to the same month a year ago due to stronger demand after states relaxed restrictive measures.

As of 9:20 GMT on Friday Spot Gold was edging down 0.31% to trade at $1,798.55 per troy ounce, after earlier touching an intraday low at $1,797.09 per troy ounce. The latter has been the metal’s weakest price level since July 28th ($1,792.79 per troy ounce).

Gold has retreated 0.81% so far in August, following a 2.47% gain in July.

Meanwhile, Gold futures for delivery in December were edging down 0.38% on the day to trade at $1,802.05 per troy ounce, while Silver futures for delivery in September were down 0.59% to trade at $25.142 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 up 0.07% to 92.317 on Friday. Earlier in the session the DXY rose as high as 92.369, which has been its strongest level since July 28th (92.749).

In terms of macroeconomic data, today market players will be paying attention to the July report on US Non-Farm Payrolls, Unemployment Rate and Average Hourly Earnings due out at 12:30 GMT. Employers in all sectors of US economy, except the farming industry, probably added 870,000 new jobs last month, according to a consensus of analyst estimates.

Near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of August 6th, 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 21st-22nd, or unchanged compared to August 5th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,805.66
R1 – $1,813.42
R2 – $1,822.69
R3 – $1,830.45
R4 – $1,838.21

S1 – $1,796.40
S2 – $1,788.64
S3 – $1,779.37
S4 – $1,770.11