Apart from the US Dollar moves, the mixed concerns about China, dedollarization and Russia also prod the Gold Price.
On Tuesday, Bloomberg came out with an analytical piece suggesting the market’s lack of confidence in China’s efforts to restore economic transition.
Alternatively, the latest headlines from Reuters suggest the US-China talks on businesses and commercial ties, which in turn flags hope of pausing the tit-for-tat moves by the world’s top-two economies, which in turn puts a floor under the Gold Price.
Further, news from Russian media claimed Moscow’s destruction of a US-made military vessel near Snake Island, which in turn triggered the risk-off mood initially before restoring the sentiment amid concerns that the vessel was operating under a US flag.
However, concerns about the dedollarization at the BRICS Summit, currently held in South Africa to facilitate diplomatic discussion among Brazil, Russia, India, China and South Africa, gain little acceptance from India and South Africa, which in turn favors sentiment. The same keep the US Dollar on the front foot, favoring the Gold bears in turn.
August PMI in the spotlight ahead of Jackson Hole
To sum up, the firmer US Dollar and challenges to sentiment keep the Gold sellers hopeful as market players await the preliminary readings of the August month Purchasing Managers Indexes (PMIs) for major economies. Should the activity numbers improve, the odds of witnessing a sooner end to the restrictive monetary policies increase, which in turn challenge the Gold sellers.
That said, the US S&P Global Manufacturing PMI is likely to improve to 49.3 from 49.0 but the Services counterpart may edge lower to 52.2 versus 52.3 prior. As a result, the
S&P Global Composite PMI is expected to reprint the 52.0 number and can let the current Gold Price weakness prevail.
It’s worth noting, however, that Friday’s Jackson Hole Symposium is the key event that can offer clear directions to the Gold Price.
Also read: Jackson Hole Preview: Powell poised to keep markets on edge, three scenarios for the US Dollar
