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Commodity Market: Gold set for biggest weekly gain since late August as US Dollar eases, US retail sales data eyed

Spot Gold looked set to register its best weekly performance since late August, as the US Dollar eased from one-year highs, while making the commodity less expensive for international investors holding other currencies.

According to Michael Langford, director at corporate advisory AirGuide, the yellow metal should settle around $1,800, but it was not likely to move higher during the upcoming week.

“The Fed is unlikely to raise rates any sooner than previously signalled and the sheer amount of money floating around in the system should help all physical assets including gold continue to rise over the next few months,” Langford said.

The majority of Federal Reserve policy makers support the view that the central bank could begin tapering its monthly asset purchases as soon as November, but still, they remain divided over inflation.

US producer prices registered their smallest increase in nine months in September, the latest data showed, after an earlier report revealed a considerable surge in consumer prices.

A potential reduction in monetary stimulus and interest rate hikes would bolster Treasury yields and increase the opportunity cost of holding non-yielding Gold.

As of 9:30 GMT on Friday Spot Gold was retreating 0.77% to trade at $1,782.19 per troy ounce, while moving within a daily range of $1,781.61-$1,796.49 per troy ounce.

The commodity looked set to register its best performance since the business week ended August 27th, while being up 1.45%. The precious metal has gained 1.47% so far in October, following a 3.13% loss in September.

Meanwhile, Gold futures for delivery in December were losing 0.54% on the day to trade at $1,788.25 per troy ounce, while Silver futures for delivery in December were down 0.62% to trade at $23.332 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 down 0.10% to 93.887 on Friday. Earlier this week, the DXY climbed as high as 94.561, which has been its strongest level since September 28th 2020 (94.636).

In terms of macroeconomic data, today market players will be paying attention to the September report on US retail sales due out at 12:30 GMT.

Near-term investor interest rate expectations were little changed. According to CME’s FedWatch Tool, as of October 15th, investors saw a 99.5% chance of the Federal Reserve keeping borrowing costs at the current 0%-0.25% level at its policy meeting on November 2nd-3rd, compared with a 100.0% chance on October 14th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,794.46
R1 – $1,802.16
R2 – $1,808.34
R3 – $1,816.03
R4 – $1,823.73

S1 – $1,788.28
S2 – $1,780.59
S3 – $1,774.41
S4 – $1,768.23

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