Article by: ETO Markets
Last Friday, the United States released its Purchasing Managers' Index (PMI), which exceeded market expectations. The preliminary manufacturing PMI was forecasted at 51 but came in at 51.7, while the preliminary services PMI was expected to be 53.4 but reached 55.1. This indicates that the U.S. economy remains resilient, helping the dollar to further its gains from last week and reach its highest level since May, around 105.76. Consequently, this limited the rise in precious metals, wiping out the gains of the previous three days. In Monday's Asian trading session, some bargain hunters entered the market, temporarily stabilizing the price of gold (XAU/USD).
This week, the final values for the United States Gross Domestic Product (GDP) and Core Personal Consumption Expenditures (PCE) Price Index will be in the spotlight. The hawkish stance of Federal Reserve officials has provided strong support for the dollar. If U.S. economic data is equally robust, precious metal prices will face pressure. On the other hand, according to the BBC, the United Nations Secretary-General stated on Sunday that "a full-scale war between Israel and Hezbollah would be a catastrophe." The safe-haven flows driven by geopolitical and economic uncertainties could boost gold at any time.
From a technical perspective, although the price of gold (XAU/USD) has fallen below the 50-day simple moving average of $… , it has not broken the upward trend line that began in February of this year. The Relative Strength Index (RSI) is at 48, indicating a neutral stance among traders with no clear direction. The $… level is a key support; breaking below this price could attract new short sellers to further pressure the gold price. On the other hand, if gold buyers manage to push the price back above $… , it would sustain the bullish trend and potentially drive the gold price into the $…-$… range.
