Gold prices exhibited minimal movement on Monday, reflecting the impact of the Federal Reserve’s hawkish statements and setting the stage for a week filled with significant economic data releases.
Federal Reserve Chair Jerome Powell’s cautionary remarks on Friday regarding the potential for further U.S. interest rate increases to combat persistent inflation were absorbed by the market. This stance, which could adversely affect gold, was balanced against the metal’s recent decline to five-month lows earlier in August.
Despite the hawkish outlook for U.S. rates, gold’s losses were tempered. The metal had shown a steady recovery from its recent lows, albeit with questions looming over its sustained strength. Compounding gold’s challenges was the dollar’s vigor, which neared three-month highs, adding to the pressures on metal markets.
Spot gold held steady at $1,915.11 an ounce, while December-expiring gold futures experienced a minor uptick of 0.1%, reaching $1,942.50 an ounce by 00:33 ET (04:33 GMT).
Powell reiterated his position that the Federal Reserve is likely to maintain higher U.S. interest rates for an extended period. The economy’s resilience offers the central bank the latitude to uphold this stance.
Anticipation has now shifted to a series of vital economic readings from the world’s largest economy this week. Noteworthy data releases include second-quarter GDP figures, personal consumption expenditures (PCE) inflation metrics, and nonfarm payrolls.
Earlier indications of GDP growth in the second quarter surpassed expectations, revealing that economic activity had not cooled as significantly as initially anticipated by the Fed.
The PCE inflation metric, a preferred indicator for the Fed, is also on the schedule this week. It is projected to affirm the persistent nature of inflation through July.
Furthermore, nonfarm payrolls data for August is due, anticipated to underscore the ongoing resilience of the U.S. labor market.
The confluence of a robust economy, coupled with steadfast inflation and a strong job market, bestows the Federal Reserve with additional latitude to sustain or prolong higher interest rates. This scenario casts a shadow over gold, given that elevated rates elevate the opportunity cost of holding non-yielding assets.
Copper, Reflecting China Optimism, Awaits PMI Data
In the realm of industrial metals, copper prices recorded an ascent on Monday, fueled by renewed optimism attributed to China’s stimulus efforts.
Copper futures experienced a 0.4% rise, reaching $3.8042 per pound.
China’s unveiling of additional measures aimed at bolstering its stock and property markets over the weekend injected optimism into the prospect of an eventual economic revival in the country.
Attention now turns to forthcoming Purchasing Managers’ Index (PMI) readings from China, the world’s largest copper importer. These PMI readings are due later in the week, on Thursday and Friday. The forecast suggests that Chinese manufacturing activity could contract for the third consecutive month in August.
