Gold Price Shows Gradual Upside Momentum Amidst Global Economic Uncertainty

The price of GOLD is exhibiting a positive trend for the fourth consecutive day, currently hovering just below the $1,920 mark, which represents a nearly two-week high reached in the previous session.

Despite this upward movement, the XAU/USD pair lacks a strong bullish stance, prompting a cautious approach before considering further advancement beyond the recent rebound originating from the $1,885 region. This area marked the lowest level since March 13 and was touched earlier this week.

Given the deteriorating economic conditions in China, a series of manufacturing surveys released on Wednesday portrayed a bleak picture of global economies’ health. Moreover, discouraging macroeconomic data from the United States indicated that business activity in the world’s largest economy was nearing stagnation in August. Notably, S&P Global’s preliminary Composite US PMI saw its most significant decline since November 2022, falling from the previous 52 to 50.4 in August. These developments contribute to concerns about a more profound global economic slowdown, further bolstering the appeal of the safe-haven GOLD price.

Additionally, reduced likelihood of further tightening of policies by the Federal Reserve (Fed) led to a pullback in the overnight yield of the benchmark 10-year US government bond from its 16-year peak.

This decline in yields supports the non-yielding gold, as does the uncertainty surrounding the timing of the Fed’s decision to halt or even cut its rate-hiking cycle. The uncertainty, combined with some buying of the US Dollar (USD), might restrain traders from placing aggressive bullish bets on gold.

In fact, the USD Index (DXY), which tracks the USD against a basket of currencies, appears to have paused its retracement slide from its highest level in over two months, recorded on Wednesday. A moderate USD strength could limit the gains of the gold price denominated in US Dollars. Market participants are eagerly awaiting Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium on Friday. Powell’s remarks will provide insights into the future path of interest rates, influencing USD demand and potentially offering new momentum to the XAU/USD pair.