Following a decline in US rates and poor US ISM Manufacturing data, gold bounces back from three-week lows.
Gold’s rebound is further supported by cooling inflation predictions and Asian demand.
After a breakthrough from a bear flag, the technical picture is still negative.
Following the release of US ISM Manufacturing PMI data, which indicates a larger-than-expected drop in May and raises expectations that the Federal Reserve (Fed) would cut interest rates as the US economy cools, gold (XAU/USD) recovered to trade in the $2,340s on Monday.
Data from the Institute of Supply Management (ISM), released on Monday, showed that the ISM Manufacturing PMI shrank to 48.7 in May, below the predicted 49.6 and 49.2 levels. The market-based odds that the Fed will lower interest rates in September increased as a result of the data. The CME FedWatch tool estimated that there was a 59% possibility of a September cut before the publication, but that number had increased to 59% after the release.Because it lowers the potential cost of owning the precious metal, the prospect of lower interest rates is good for gold.
