Gold pressured, but eying $1,840

Gold is under pressure despite the weaker the US dollar. At $1,823, gold price is down by 0.23% while the US dollar is also underwater, currently down by 0.18%.

The US dollar has struggled versus its major rivals at the start of the week due to expectations concerning inflation which is anticipated to ease giving reason to investors to reassess the projected path of the Federal Reserve in July onwards.

Core PCE prices will be in focus that have likely advanced firmly in May. US manufacturing surveys that have already been released indicate a deceleration in activity in June. The Dallas survey today was very poor, -17.7 versus -3.1.

On Tuesday, markets will have the Richmond report release that is expected to show a move to -5 vs. -9 in May. Overall, the outcome of these data points this week will serve to move the needle with respect to the Federal Reserve’s tightening expectations.


The ECB and the euro are also going to be in focus to monitor the US dollar’s reaction. And weaker dollar is perceived of as supporting gold higher. The ECB forum begins tonight in Portugal. Euro-area inflation will be coming out this week as well and this likely rose further in June due to broadening price pressures and investors will look to this to watch the likelihood of a 50bps hike from the ECB in September.

Gold prices are also pushed higher as rising recession risks drive inflows into the precious metal. In turn, while gold bears are looking for catalysts, recession fears have started to spark a bid for safe-havens, given this historically has led a pivot in Fed policy.