Gold price is struggling to capitalize on the previous day’s recovery from a more than one-week low.
Gold prices (XAUUSD) rose somewhat on Tuesday, snapping a four day losing trend and reaching a one-and-a-half-week low the day before. US Treasury bond yields fell following a dismal housing market data, and Vice President Kamala Harris secured enough support to become the Democrats’ likely nominee in the November 5 general election. Aside from this, a minor decline in The global risk sentiment, as evidenced by a softer tone in global equity markets, led some refuge flows to the precious metal, contributing to the bullish advance.
The USD reaches a nearly two-week high on Wednesday, acting as a headwind for the metal.
The supporting factors mostly countered by a further US Dollar (USD) recovery from a nearly four-month low, which worked as a headwind for the Gold price throughout the Asian session on Wednesday. Traders appear hesitant, preferring to wait for additional clues about the Fed policy course before preparing for the next leg of a directional move for the non-yielding yellow metal. As a result, the focus remains on the release of the US Personal Consumption Expenditure (PCE) Price Index data on Friday. Meanwhile, traders will draw clues from the globe Flash PMIs are due later today.
Daily Market Movers: Gold price bulls stay on the sidelines despite conflicting fundamental cues.
A minor drop in US Treasury bond yields, combined with a lower risk tone, helped the gold price gain upward traction on Tuesday and move away from a one-week low reached the previous day.
The National Association of Realtors announced that US existing home sales declined 5.4% in June to a seasonally adjusted annual rate of 3.89 million units, the lowest since December and falling short of consensus expectations.
The Federal Reserve Bank of Richmond’s most recent survey found that manufacturing activity deteriorated in July, with the composite manufacturing index falling to -17 from -10 the previous month.
US Vice President Kamala Harris clinched enough delegates to claim the Democratic candidacy, prompting some unwinding of the ‘Trump trade’ and lowering the US bond yield.
Investors, meanwhile, expect the US central bank to begin decreasing borrowing costs at its September meeting and have factored in the likelihood of two more rate cuts by the end of the year.
This, in turn, provides some support for the non-yielding yellow metal, while some follow-through US Dollar purchasing limits any further appreciation as traders await critical US macroeconomic data.
The US Gross Domestic Product (GDP) data for the second quarter will be publish on Thursday. Followed by the important Personal Consumption Expenditures (PCE) Price Index data for June will be released on Friday.
This will provide new insight into the Fed’s interest rate path, which will have a significant impact on USD price dynamics and assist determine the next leg of a directional move for the XAUUSD pair.
Meanwhile, Wednesday’s release of flash PMIs will be watched for clues about the health of the global economy, allowing traders to seize short-term chances in the precious metal.
