📊Strong U.S. data put pressure on gold
The gold (XAU) price dropped by 0.58% against the U.S. dollar (USD) on Monday. The U.S. Dollar Index (DXY) continued to increase after the release of better-than-expected Purchasing Managers' Index (PMI) report.
👉Possible effects for traders
The survey from S&P Global on Monday showed U.S. business activity picked up in March. The data also indicated that fears over import tariffs and deep government spending cuts weighed on sentiment. The benchmark services PMI substantially exceeded the market forecast, pushing the greenback higher and making gold more expensive for holders of other currencies. 'We've hit record after record, and now the market is just consolidating these gains, and this is enforced by somewhat higher U.S. dollar.
We're looking at a level of about $3,150 plus, later in the year, that gold will likely strive to as the Fed (Federal Reserve) starts loosening monetary policy', said Bart Melek, head of commodity strategies at TD Securities. Indeed, despite the risks of higher tariffs-driven inflation, the market still expects the Fed to continue cutting rates in 2025. Investors are currently pricing in a 26% chance of three 25-basis-point (bps) rate cuts by the end of the year.
Meanwhile, U.S. and Russian officials met in Saudi Arabia to advance negotiations for a wider Ukrainian ceasefire. The U.S. is also pushing for a separate Black Sea maritime ceasefire. 'If over the week the talks in Saudi Arabia do materialise and there is a dip in gold based off that, I expect it will be bought up fairly quickly', said Bob Haberkorn, senior market strategist at RJO Futures.
XAUUSD rose slightly during the Asian and early European trading sessions. Today, traders should focus on the news regarding Russia-Ukraine peace talks and developments around trade tariffs. In addition, the U.S. CB Consumer Confidence report at 2:00 p.m. UTC may add extra volatility to all USD pairs. Higher-than-expected figures may push XAUUSD below $3,000, while lower-than-expected results may pull the pair above $3,028.
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