Gold price languishes near lows, awaits US data

New York (Aug 3)  Gold prices on Comex is seen testing daily lows reached at 1091.50 levels as the strengthening US dollar on the back of rising shorter duration US treasury yields continue to exert additional pressure on the yellow metal.

Gold drops from $ 1094.50

Currently, gold trades -0.24% lower at 1092.10, stalling its recovery near 1097 levels. Gold snapped Friday’s heavy gains and fell deeper into the red as rising shorter duration treasury yields on increased Sept Fed rate-hike bets continue to weigh on the gold prices, diminishing gold’s appeal as a higher yielding asset.

The yields on the 2-year treasury notes trades 1.24% higher at 0.684% while the US dollar index, a virtual gauge of greenback’s strength, now trades 0.21% higher at 97.53. A stronger greenback makes dollar-priced in gold more expensive to holders on other currencies and vice-versa.

The market has been unable to sustain a rally above the 1,100 marker in spite of the recent weakness in the greenback induced by a bigger than expected miss on the labour data released on Friday.

Meanwhile, traders now look forward to today’s manufacturing PMI reports from the US for further momentum on the USD moves. The ISM manufacturing PMI is expected to hit 53.5 points in July, which would be a rise from June's 52.8., while Markit's factory PMI may rise to 53.8 from 53.6 previously.

Apart from economic data, investors may react to a speech from Fed Governor Jerome Powell who will be speaking in Washington later in the day.

Gold Technical Levels

The metal has an immediate resistance at 1100 and 1105 levels. Meanwhile, support stands at 1090 below which doors could open for 1086 levels

Source: FXstreet