Gold is near a multi week low and appears vulnerable below the 50-day SMA.
The gold price (XAUUSD) struggled to gain any substantial impetus during the Asian session on Monday. Due to a combination of diverging pressures and remains near a three-week low reached on Friday.
Fed rate cuts undercut the USD, while geopolitical worries give support.
The growing agreement that the Federal Reserve (Fed) would begin decreasing interest rates later this year. Reinforced by signs of weakening inflationary pressures in the United States (US), continues to erode the US Dollar (USD). This, combined with ongoing geopolitical uncertainties, seem to be significant factors in supporting the safe-haven precious metal.
The gold price’s upside potential remains limited despite a generally bullish risk tone and optimism for a cease-fire in Gaza. Traders also appear hesitant and prefer to wait for this week’s publication of key US macro data. Which is slated for the start of a new month, including the Nonfarm Payrolls (NFP) report on Friday. Aside from that, key central bank event risks – the Bank of Canada (BoC) decision on Wednesday. And the European Central Bank (ECB) meeting on Thursday – are expected to influence the non-yielding yellow metal.
Daily Market Movers: Gold pricing fails to attract buyers despite a weaker US dollar.
The US inflation data was on track. with predictions and strengthened expectations that the Federal Reserve will lower interest rates this year. Hurting the US dollar and serving as a boost for gold prices.
The US Bureau of Economic Analysis (BEA) stated on Friday that the Personal Consumption Expenditures (PCE) Price Index increased 0.3% in April. And remained constant at 2.7% year on year, confirming consensus expectations.
The Core PCE Price Index. Which includes volatile food and energy costs, also met forecasts, rising 2.8% year on year. While Personal Income and Personal Spending increased 0.3% and 0.2%, respectively.
The news raises bets for an early Fed rate decrease this year and leads to a further decline in US Treasury bond yields. Keeping the USD bullish. on the defensive, offering support to the unyielding yellow metal.
Furthermore, tensions in the Middle East limit the downside for the safe-haven XAUUSD. While a generally upbeat tone in the equity markets should contain the upside.
China’s Caixin S&P Global Manufacturing Purchasing Managers’ Index (PMI) increased to 51.7 in May from 51.4 the previous month, indicating signs of stability in the world’s second-largest economy and improving investor confidence.
Furthermore, recent excitement about a new ceasefire proposal for Gaza revealed by US President Joe Biden is discouraging traders from taking aggressive optimistic wagers on the commodity.
A strong risk tone limits the upside ahead of global PMIs and the US ISM PMI.
Market players are now anticipating the release of the final global Manufacturing PMI prints for short-term trading possibilities ahead The US ISM Manufacturing PMI will be released later in the day.
This week, investors will also face crucial US macroeconomic releases, such as the NFP data, as well as key central bank event risks, with the BoC policy decision on Wednesday and the ECB meeting on Thursday.
