Gold (XAU/USD) falls close to Monday’s lows as investors look for fresh developments in Israeli-Palestinian tensions. The US is urging the Israeli military to delay a ground assault in Gaza and prioritise the release of hostages and the delivery of humanitarian aid to civilians. Investors are also awaiting the release of key economic indicators that will influence the Federal Reserve’s (Fed) interest rate outlook.
Meanwhile, upbeat preliminary US PMI data for October, as reported by S&P Global, has reduced the appeal of gold. S&P Global reported that the manufacturing PMI kissed the 50.0 threshold for the first time since November 2022. The 50.0 factory data beat expectations of 49.5 and September’s reading of 49.8. The services PMI came in at 50.9, against expectations of 49.9 and the previous reading of 50.1.
More broadly, gold remains underpinned as Israel continues its airstrikes in Gaza, which have resulted in more than 5,000 deaths and 15,000 injuries. Meanwhile, long-term bond yields and the US dollar are drifting lower as investors hope that the Fed is done raising interest rates. Looking ahead, investors will focus on GDP data for the July-September quarter and the Fed’s preferred inflation gauge for September.
Gold is showing volatility contraction near $1,980.00 ahead of key US economic data. The precious metal is turning sideways after failing to extend the rally above the $2,000 psychological resistance level. The 20- and 50-day Exponential Moving Averages (EMAs) have made a bullish cross above the 200-day EMA, warranting further upside.
