Price Performance Indicators

Gold Focus :

1. ICDX gold price weakened -1.20% in the week (31/07 - 04/08).
2. US and China economic conditions.

Market Review

ICDX gold price weakened by -1.20% compared to the previous week influenced by various positive US data strengthen the dollar and gloomy Chinese economic data. The dollar index experienced a weekly gain of 0.14%.

A series of positive US economic data was released indicating a resilient economic condition. Consumer spending, which accounts for more than two-thirds of US economic activity, increased 0.5% in June after rising 0.2% in May. From the manufacturing sector, the US Manufacturing PMI report edged up to 46.6 in July compared to the level of 46 reported the previous month but still lower than expectations at the level of 46.8. The improving manufacturing data was followed by US factory orders which jumped 2.3% month-on-month for June, higher than May's 0.4% increase.

From the demand side, China, as one of the main consumers of gold, recorded a slowdown in business activity. China's purchasing managers' index (PMI) survey for the manufacturing sector has held below the indicator level of 50 in the past four months although it edged up to 49.3 for July from the 49 reported the previous month. The non-manufacturing PMI fell to 51.5 from the 53.2 reported in June. Overall, the China General PMI was at 51.1 from 52.3 in June. China's slowing economic development has sparked fears of disruption to demand for gold.

Market View

US Inflation and The Fed's Monetary Policy

The continuation of the US central bank's monetary policy still overshadows the movement of gold prices. The most recent data of personal consumption expenditures price index (PCE), the Fed's preferred gauge of inflation, increased 3.0% on an annual basis in June, the smallest annual increase since March 2021 and following May's 3.8% rise. Philadelphia Fed President Patrick Harker welcomed data that showed inflation had fallen substantially from its current high of four decades a year ago and took the side of keeping interest rates steady and letting the monetary policy actions they have taken do their job. While the opposite tone was conveyed by Fed Board Member of Governor Michelle Bowman who noted the recent lower inflation reading was positive but needed consistent evidence that inflation is on a meaningful path towards the 2% target considering how long rates need to be stay at a strict level. Adding to the uncertainty of the economic situation, rating agency Fitch downgraded the US credit rating to AA+ from AAA citing a fiscal reduction in the next three years.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Source: ICDX Research