- The price of gold gains ground on Thursday for the fourth day in a row.
- XAU/USD is supported by fears of a deeper global economic recession.
- The appearance of buying around the US dollar could limit the gains of the yellow metal.
Gold (XAU/USD) is trading a positive bias for the fourth day in a row on Thursday and is currently sitting just around the $1,920 zone, or a nearly two-week high. XAU/USD, however, lacks bullish conviction, warranting some caution before positioning for an extension of the recent bounce from the $1,885 zone, or the lowest since March 13 hit earlier this week. .
Against the backdrop of worsening economic conditions in China, a series of manufacturing surveys released on Wednesday painted a bleak picture of the health of economies around the world. In addition, dismal US macroeconomic data showed business activity in the world’s largest economy approached stagnation point in August. In fact, S&P Global’s preliminary US composite PMI posted its biggest drop since November 2022, dipping to 50.4 points in August from the previous 52. This adds to concerns about a deeper global economic downturn and turns out to be a key factor driving the safe-haven Gold price higher.
On top of this, the diminishing odds of further monetary policy tightening by the Federal Reserve (Fed), which led to a retracement the previous day in the benchmark 10-year US government bond yield. The US from a 16-year high supports the non-yielding yellow metal. Markets, however, seem unsure when the Fed will stop its rate hike cycle or even start cutting rates. This, coupled with the appearance of some buying around the US dollar (USD), could discourage traders from taking aggressive bullish positions around the price of gold.
In fact, the DXY Dollar Index, which measures the dollar against a basket of currencies, appears to have halted its slide from the highest level in more than two months reached on Wednesday. Modest dollar strength could cap the price of US dollar-denominated gold as investors look forward to Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium on Friday. Investors will be looking for clues on the future path of rate hikes, which will boost demand for USD and provide a further boost to XAU/USD.
Gold technical levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
