Gold price remains stable around $1,920 per troy ounce during the early Asian trading hours on Monday. The precious metal maintains its position near the previous week’s closing price, finding subtle support as the US Dollar (USD) undergoes minor adjustments.
The US Dollar Index (DXY), a gauge of the Greenback’s performance against six major currencies, currently hovers around 104.80, slightly below its peak since April. Meanwhile, US Treasury yields have risen, potentially impacting the value of gold. The yield on 10-year US Treasury bonds has reached 4.29%, marking an increase of 0.52%.
The USD is anticipated to maintain its strength, bolstered by a continuous stream of positive economic data regarding the US economy. Notably, US Initial Jobless Claims reported 216K for the week ending September 2, surpassing the market consensus of 234K and revising the previous week’s figure of 229K.
On the international front, China’s Consumer Price Index (CPI) data for August was released on Saturday, revealing a year-on-year increase of 0.1%, an improvement compared to the previous month’s figure of -0.3%. However, it fell short of market expectations, which had predicted a 0.2% reading. This relatively subdued CPI suggests ongoing disinflationary pressures, which could potentially influence the downward trajectory of gold prices.
As the week unfolds, market participants will gain deeper insights into China’s economic landscape, along with the challenges authorities face in implementing necessary monetary and fiscal measures to achieve Beijing’s target of 5% GDP growth this year.
Additionally, the US Federal Reserve (Fed) is poised to maintain elevated interest rates for an extended period. Furthermore, there is speculation that the Fed may implement a 25 basis point (bps) interest rate hike by the end of 2023. This hawkish stance from the central bank could exert significant pressure on gold prices.
Furthermore, investors eagerly await the release of the US Consumer Price Index (CPI) for August, scheduled for Wednesday, seeking further indications of evolving market dynamics.