Gold prices (XAU/USD) found support around $2,410, ending a three-day decline during Monday’s early Asian session. The uptick in the yellow metal comes amidst political turbulence in the United States following President Joe Biden’s announcement that he will not seek reelection, scheduled to address the nation later this week regarding his decision.
Market analysts suggest Biden’s withdrawal from the presidential race could heighten market volatility. Peter Earle, senior economist at the American Institute for Economic Research, emphasized that investors may seek safe-haven assets amid uncertainty over future policies under a new candidate.
Meanwhile, concerns over regulatory changes in China, the world’s second-largest economy, also boosted demand for gold. Stricter guidelines effective from August 1 are expected to impact the $715 billion hedge fund industry, prompting firms to seek additional funding or consider closure.
However, despite dovish remarks from Federal Reserve policymakers and expectations of rate cuts in September, gold prices did not rally significantly on Friday. The International Monetary Fund’s recommendation to delay rate cuts until late 2024 tempered expectations. Investors are now focusing on upcoming US economic data, including preliminary readings of the S&P Global PMI, Gross Domestic Product (GDP) for Q2, and the Personal Consumption Expenditures – Price Index (PCE). Stronger-than-anticipated figures could diminish prospects of a Fed rate cut this year, potentially capping gains in the gold market.
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