Gold's long fall last week after hitting Monday's all-time high (ATH) of 3% has dragged it back to the $2,335 area.
The decline was driven by short-term US Treasury yields and a better-than-expected US PMI. Business activity in the services and manufacturing sectors increased more strongly in May.
This will give room for high interest rates to last longer.
Meanwhile, the price of gold is now at $2,338.73, which is up by 0.21% since it opened in the Asian trading session this morning.
Inflationary pressures that are still stubborn than earlier expectations and the prospect of bank easing have eased due to the still strong economic resilience. This scenario favors the USD currency and prevents the yellow metal from setting new records later this month.
Although the outlook for gold prices is seen as slightly neutral on the downside, the market will have to reassess that view this weekend when Consumer Expenditure (PCE) data is set to give new direction to the latest measure of inflation.
Consensus estimates showed that core PCE rose 0.3% in April leaving the annual reading still low at 2.7% from 2.8% previously.
The metal commodity market is now hoping for the PCE data to cool down and push the US economy to experience a disinflation trend again like the end of 2023. This expectation will continue to help the Federal Reserve (Fed) continue its mission of lowering interest rates this year.
From a technical point of view, the price of gold remains high if you want to compare it with the level of the last few months. However, its fall last week prompted the market to target the resistance level at the $2,375 zone. The breakthrough of the technical ceiling will launch an attack to the next high position of $2,420.
Assuming it continues its downtrend, the market places a short-term support level at $2,310 and further extension around $2,300 to $2,280.
