Gold price is struggling on Monday as the US dollar recovers. US consumer spending data was stronger than expected and boosted the US dollar. Among other precious metals, silver is down 1% at $16.44/oz. Platinum is down 0.3% at $983/oz. Palladium, however, is up 0.2% at $805/oz.
Following stronger than expected US data last week, gold prices have continued to struggle. On Friday, the US jobs report for September showed that unemployment has hit a near 50 year low at 3.7%. However, February and March’s jobs reports were revised down to show a total of 80,000 fewer jobs than previously thought. This could be a sign that the US economy is in fact slowing down. The strong data could also have been an indication that inflation is on the rise, which would be bad for gold prices. Furthermore, the data indicates that the Federal Reserve is unlikely to raise interest rates next month, which means that the US dollar’s rally will continue.
- Positive GDP figures limit growth potential
- The strong growth of the stock market is also a factor
- Key PMI data for China Next key driver
The gold market remains weak and closed below the intraday high. It is now trading below $1770 as the downward trend of recent weeks continues in the face of renewed confidence in the global economy, particularly in the US, and continued weakness of the US dollar in the foreign exchange market. These factors, along with a strong stock market and rising bond yields, have kept gold prices under pressure recently as the precious metals market looks to the next quarter. Important data that may shed light on how gold prices will end the week are the China PMI data, which will be released later this week.
Collapse of GDP puts pressure on gold prices
This week’s US GDP data was generally above analysts’ expectations. A growth rate of 6.4% shows that the economy is starting to grow strongly. The effect of this figure is a riskier approach to investment, which is generally not beneficial to gold and its status as a major safe haven in difficult times.
This was reflected in the recent drop in prices and the precious metal traded in a range yesterday, but closed slightly lower. The consolation here is that such big numbers are still preliminary and can easily be revised downwards. Even then, they would represent a sharp increase from the 4.3% in the previous quarter.
Weak dollar and equities
The continued weakness in the US money market may benefit the growth of other major currencies around the world, but it is also not conducive to the gold price. This weakness in prices is also a sign of a more risk-tolerant investment approach, which in turn could have an impact on the price of gold.
Still, the gold market is unclear ahead of Friday’s session, as stock market futures and the US dollar index – a measure of the greenback’s strength against a basket of the world’s major currencies – point to a negative opening. This could see gold end the week on a higher note, although a more sideways trade in the market is likely due to the mixed signals. Shares also rose just before the close, taking control of trading momentum.
China’s PMI data under the microscope
Asian trade and news on China’s purchasing managers index are likely to be the main drivers of gold prices today. These non-manufacturing PMI indices fell from the previous month’s high of 54.9, and the composite PMI also fell. Contributing factors include international transport problems and rising costs in the logistics sector.
This move could well strengthen the gold market later in the day, even though the data is still generally positive and suggests that the economy continues to grow as efforts are made to put the COVID-19 pandemic in the rear view mirror.
This source has been very much helpful in doing our research. Read more about gold bullion price and let us know what you think.
gold stocksilver pricessilver futuresgold price stockgold price chart 20201 gram of gold price,People also search for,Privacy settings,How Search works,gold price stock,gold price chart 2020,1 gram of gold price,gold bullion price,gold stock,silver prices,silver futures