As markets closed some of their gains following a strong Q1, gold prices declined on Monday. As of now, attention is being paid to US economic data, which will reveal new details about monetary policy.
During the first 3 months of the year, gold prices have risen over 7%, despite most of the gains coming in March along with a big fear of a banking crisis in the US. Government intervention may have calmed market fears of a possible collapse, but gold continues to be supported by safe-haven demand.
This prompted profit taking earlier in the week, although gold has held at around $100 since the record high in 2020.
Spot gold prices fell to $1959.03 an ounce, with futures down 0.5% to $1975.60 an ounce.
This week, the focus is on a slew of economic data from the US, starting with the release of manufacturing activity data for March. Such a figure is expected to show that the US manufacturing sector is in contraction for the 5th straight month.
However, an important point of interest will be the non-farm payrolls data for March released towards the end of the week. Traders will be watching for signs of weakness in the labour market, which could hint to be the strongest position of the Fed this year.
Such a scenario is very encouraging for gold, which has recently surpassed the dollar as the preferred safe-haven. Expectations that the Fed will moderate its hawkish stance in order to reduce further pressure on the banking system have contributed to this.
The dollar rose on Monday as it recovered from the heavy losses it experienced in March. Together with some strengthening in government bond yields, this weighed on the metals markets.
Among industrial metals, copper prices fell on further signs of weakening manufacturing activity in China.
A private survey on Monday suggested that China’s manufacturing growth slowed sharply in March as the post-COVID economic boom began to run out of breath, pointing to an uneven economic recovery in the country that could reduce its appetite for commodities.
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