The Gold market has come under pressure following the release of the US Manufacturing PMI data, which surpassed expectations with an actual figure of 50.9 compared to the forecasted 49.8. This data indicates growth in the US manufacturing sector, fostering optimism about the economy and strengthening the US dollar. Before the release, Gold had reached a record high of $2,830 per troy ounce, driven by expectations of a slowing global economy and a flight towards safe-haven assets. However, the improvement in US economic data led to a stronger dollar, putting downward pressure on Gold prices.
Despite the recent correction in Gold prices after the data release, several fundamental factors continue to support the potential for future increases in this precious metal. Global uncertainties, such as geopolitical tensions and expectations surrounding the Federal Reserve’s monetary policy, remain significant drivers for Gold. Market participants are still anticipating that the Federal Reserve might begin to lower interest rates in the coming months if other economic data shows signs of weakness. Lower interest rates typically weaken the dollar and enhance Gold’s appeal as a hedge against inflation.
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Additionally, persistently high inflation is also a supporting factor for Gold in the medium to long term. If inflationary pressures continue, investors are likely to return to Gold as a safeguard for their assets. With this combination of technical and fundamental factors, despite the pressure from favorable PMI data, the chances for Gold to regain strength remain open, particularly if there are dovish signals from the US central bank or increased global tensions that drive demand for safe-haven assets.
Furthermore, currency pairs such as EURUSD and GBPUSD have weakened following the data release, with EURUSD dropping to around 1.0243 and GBPUSD declining to 1.2337.
