Gold lost traction in Monday’s Asian session.
On Monday, the gold price (XAUUSD) fell further below the psychological level of $2,500. The stronger US dollar following the July Personal Consumption Expenditures (PCE) Index weighed on the precious metal. Furthermore, fears about China’s slowing economy, the world’s largest buyer of gold, add to the precious metal’s decline.
Nonetheless, the increased likelihood of an interest rate drop by the US Federal Reserve (Fed) at its September meeting may help limit Gold Losses occur as interest rates fall, lowering the opportunity cost of keeping non-yielding gold.
Traders will watch the US PMI data ahead of Friday’s employment announcement.
The US ISM Manufacturing PMI for August is due on Tuesday, while the Services PMI will be issued on Thursday. On Friday, the focus will shift to US employment statistics, such as Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings for August.
Daily Market Movers: Gold price falls on the US PCE inflation report.
Protests erupted across Israel after the IDF discovered the bodies of six hostages that it claimed Hamas had executed in Gaza. According to CNN, Israel’s largest labor group has called for a walkout, claiming that the “entire Israeli economy will shut down” on Monday.
The Chinese NBS Manufacturing Purchasing Managers’ Index (PMI) fell to 49.1 in August dropped from 49.54 in July, falling short of the market estimate of 49.5. Non-manufacturing PMI rose to 50.3 in August from 50.2 the previous month, exceeding expectations of 50.0.
The US Bureau of Economic Analysis said on Friday that the US headline Personal Consumption Expenditures (PCE) Price Index increased 2.5% YoY in July, compared to the prior reading of 2.5%, which was lower than market estimates of 2.6%.
The core PCE, which excludes volatile food and energy costs, increased 2.6% year on year in July, compared to 2.6% the previous month, falling short of the consensus of 2.7%.
The markets are now pricing in a roughly 70% chance of a 25 basis points (bps) rate decrease by the Fed in September, while the odds of a 50 basis point reduction are standing at 30%.According to the CME FedWatch tool.
