Gold prices plunged as significant global economies revelled positive indications and signs of recovery. COMEX Gold Futures fell from the level of $1324.50 (Day’s high on 25th March 2019) to the level of $1286.10 (Day’s low on 29th March). The prices are currently hovering around $1295 mark.
The factors which exerted the pressure on gold prices were improving signs in economic activities from the U.S. and China. The U.S. Revised UoM Consumer sentiments which track the level of confidence of a sample population in the domestic economy surged to 98.4 for March 2019, as compared to the market expectation of 97.8.
A rise in the consumer confidence supported the dollar prices, and dollar index (DXY) rose from the level of 96.82 (Day’s low on 28th March) to the level of 97.34 (Day’s high on 29th March). The extended gains in dollar prices exerted pressure on gold.
Apart from improved consumer confidence, the new homes sales also increased in the United States. New Home Sales rose to 667k for February 2019, as compared to the market expectation of 625k and previous 636k.
The Bullion investors were backing on deterioration in the global economy due to which investors expected new home sales to decline. An increase in home sales figure jolted the bullion investors and supported dollar gains, which in turn also exerted pressure on gold prices.
Not just the U.S. economic conditions revelled recovery signs ,another major economy; China, also recovered after a slowdown in the economy in the last quarter. China Manufacturing Purchasing Manager Index (PMI) soared to 50.5 for March 2019, as compared to the market expectation of 49.6, which was well above its mean value of 50.0, which in turn denoted an expansion in the domestic economy and exerted pressure on gold prices.
Apart from that, the second important indicator of expansion, Caixin Manufacturing PMI, rose to the level of 50.8, above the central value of 50.0, against the market expectation of 50.1.
The rise in the duo of manufacturing index, which above a value 50.0 suggests rapid expansion, supported the base-metals prices in the global market and exerted pressure on gold prices as a better economy leads to better return from other assets such as Stocks, Bonds, Currency, etc. and it tends to depreciate the gold value.
On the U.S-China trade front, the delegation from Beijing is all set to begin another round of trade talks in Washington later this week to end the long disputing bilateral trade disagreement between the two significant economies. The trade talks progressed further after last week delegation from the U.S. including Treasury Secretary Steven Mnuchin, and Trade Representative Robert Lighthizer finished round of trade talks in Beijing.
To further gauge the direction of gold prices, the market participants await further datas such as Core Retail sales figure and ISM Manufacturing PMI along with Core Durable Goods Orders figures, all due for this week.
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