Gold price (XAU/USD) slips to $2,320 following a retreat from recent highs near $2,368 in early Asian trading on Monday. The decline comes in response to robust US Purchasing Managers Index (PMI) figures released Friday, underscoring challenges for the yellow metal. Attention now turns to this week’s US economic indicators, including the final readings of Gross Domestic Product (GDP) and Core Personal Consumption Expenditures (PCE) Price Index.
Throughout June, US economic data has presented a mixed picture. According to S&P Global’s latest report on Friday, the advanced US Composite PMI for June surpassed expectations, rising to 54.6 from May’s final figure of 54.5, marking its highest level since April 2022. The Manufacturing PMI climbed to 51.7 in June, up from May’s 51.3, surpassing the forecast of 51.0. Similarly, the Services PMI increased to 55.1 from May’s 54.8, exceeding the consensus of 53.7.
Federal Reserve officials have adjusted their stance on interest rate cuts this year. Richmond Fed President Tom Barkin stated on Thursday that while the central bank has sufficient tools, more time is needed to assess economic conditions. Meanwhile, Minneapolis Fed President Neel Kashkari suggested it could take up to two years to rein in inflation to the targeted 2%. The stronger US economic data and the hawkish comments from Fed officials have bolstered the US Dollar, thereby pressuring gold prices downwards. Higher interest rates typically reduce the appeal of non-yielding assets like gold.
Conversely, gold may find support from safe-haven demand amidst geopolitical tensions. Over the weekend, UN Secretary-General expressed grave concerns about potential conflict between Israel and Hezbollah, emphasizing the human cost of recent hostilities in Gaza City.
In conclusion, while US economic indicators continue to exert downward pressure on gold prices, geopolitical uncertainties offer a counterbalancing influence, underscoring the volatile landscape for the precious metal in the near term.
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