During early Asian trading on Monday, the price of gold (XAU/USD) rebounded from $2,410, breaking a three-day decline streak. This upward movement comes amidst a cautious market environment fueled by significant developments in the United States.
Over the weekend, President Joe Biden announced his decision to withdraw from the upcoming presidential race, citing plans to address the nation in detail later this week. Analysts speculate that Biden’s unexpected withdrawal could heighten market volatility. Peter Earle, a senior economist at the American Institute for Economic Research, remarked, “Uncertainty surrounding potential successors could drive investors towards safe-haven assets, as they await clarity on whether new leadership will uphold or diverge from current economic policies.”
Meanwhile, concerns emanating from China, the world’s second-largest economy, have also bolstered demand for the precious metal. Regulatory changes set to take effect next month are placing renewed pressure on China’s $715 billion hedge fund industry. Reuters reports indicate that these adjustments, including stricter asset thresholds and investment guidelines, have prompted some firms to seek additional capital or contemplate closure.
Conversely, despite dovish signals from Federal Reserve policymakers and expectations of impending rate cuts in September, gold failed to benefit on Friday from the prospect of reduced interest rates. The International Monetary Fund’s recent recommendation to delay rate cuts until late 2024 has underscored the cautious sentiment among investors.
This week, market focus will be on key US economic indicators including the preliminary S&P Global PMI, Gross Domestic Product (GDP) for Q2, and the Personal Consumption Expenditures – Price Index (PCE). Stronger-than-expected data could dampen expectations for a Fed rate cut this year, potentially limiting further upside for gold prices.
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