Daily digest market movers: Gold price capitalizes on Fed’s dovish guidance and Middle East conflicts
- Gold price gradually declines to near $2,440 in Thursday’s European trading hours. However, its near-term outlook remains firm due to multiple tailwinds. Apart from firm expectations that the Fed will start lowering its key borrowing rates from September, upside risks to widening Middle East conflicts have improved Gold’s safe-haven appeal.
- Iran vows to retaliate for the killing of Hamas leader Ismail Haniyeh by an Israeli air strike in Tehran, stating that Israel will "pay a heavy price”. This has prompted risks of an all-out war in the Middle East. Historically, investors see investment in precious metals as a safe bet amid geopolitical tensions.
- In Thursday’s session, investors will focus on the United States (US) ISM Manufacturing Purchasing Managers’ Index (PMI) report for July, which will be published at 14:00 GMT. The PMI report is expected to show that activities in the manufacturing sector improved, rising to 48.8 from June’s reading of 48.5, but remain contracted. A figure below the 50.0 threshold is considered a contraction in factory activities.
- In the same period, the Manufacturing Prices Paid index is estimated to have expanded at a slower pace of 51.8 from the former release of 52.1. The Prices Paid index is a key measure of change in input prices. A slower growth in this index boosts expectations of cooling inflationary pressures.
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