Gold Price Continues Losing Streak as US Dollar Seeks Demand Amid Cautious Mood

Gold prices are experiencing their sixth consecutive day of losses on Monday, with the US Dollar seeking fresh demand in a cautious market environment. Despite the United States successfully averting a government shutdown, investor sentiment remains cautious.

The US Congress voted late on Saturday to pass a stopgap funding bill, gaining overwhelming Democratic support, thus preventing the federal government from experiencing its fourth partial shutdown in the past decade.

Over the weekend, China’s business PMIs delivered mixed results, which had a dampening effect on investor sentiment, particularly in light of the Chinese Golden Week holiday leading to lighter trading activity. The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) for September fell to 50.6 from the previous month’s reading of 51.0, missing expectations of 51.2. The services index also declined to 50.2 in September compared to 51.8 in August, marking its lowest level since December.

However, official data released by China’s National Bureau of Statistics (NBS) showed that the Manufacturing PMI and the Non-Manufacturing PMI exceeded expectations, coming in at 50.2 and 51.7, respectively, for September.

The persistently hawkish rhetoric from the US Federal Reserve (Fed) and the resilience of the US economy are contributing to a bullish sentiment around the US Dollar and US Treasury bond yields. Consequently, this environment has left non-yielding assets like gold struggling, with prices hitting seven-month lows.

The focus now shifts to critical job data from the United States. On Tuesday, the JOLTs Job Openings data will provide fresh insights into the country’s labor market, particularly as inflation shows signs of cooling down. In August, the Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation measure, softened to 0.1% MoM and 3.9% YoY.

Additionally, market participants will closely monitor the US ISM Manufacturing PMI and a speech by Fed Chair Jerome Powell later in the day. These events could provide valuable hints regarding the state of the economy and the outlook for interest rates, potentially impacting the valuations of the US Dollar and the price of gold.