During Monday’s North American trading session, gold prices initially plummeted over 1%, reaching a new six-day low of $2,364 amidst a global market sell-off triggered by disappointing data from the United States. However, the precious metal managed to recover and was trading at $2,407, down 1.40% against the US dollar (XAU/USD).
Market sentiments turned cautious as financial markets began factoring in the possibility of a recession in the US. Traders are anticipating a significant interest rate cut of 50 basis points by the Federal Reserve during the upcoming September meeting, following concerning reports from the Institute for Supply Management (ISM) indicating a sharp decline in manufacturing activity and subdued job additions to the workforce.
Investor concerns were somewhat alleviated by the ISM Services PMI release, revealing that the US economy is continuing to expand at a more robust pace. Despite this positive data, gold prices remained under pressure, even as the US Dollar Index (DXY) depreciated by 0.50% to 102.70 against a basket of six major currencies.
Meanwhile, US Treasury bond yields experienced a decline, with the 10-year yield dropping one basis point to 3.783%, rebounding from earlier multi-week lows of 3.667% recorded in the session.
Amidst these economic uncertainties, escalating tensions in the Middle East provided some support to gold prices. Following the assassination of a Hamas leader earlier in the week, Israel is awaiting responses from Iran and Lebanon. Reports from Sky News Arabia indicated that a US base in Iraq had been targeted by multiple missiles, further adding to geopolitical anxieties in the region.
