The gold price is under further pressure today, hovering near a 3-week low after strong data out of the US gave a significant boost to the greenback.
At 4.27pm (GMT) gold was trading at $1,247 down from $1,256 in yesterday’s trading.
Both Markit services PMI and Non-Manufacturing PMI data from the US hit the market earlier today above analysts’ expectations which sent investors piling into the greenback and out of gold.
The news may set the stage for the latest interest rate decision from the US Federal Reserve in a few hours where no changes in rates are expected but the following press conference is predicted to be bullish which may put further pressure on the gold price.
Jordan Eliseo, Chief Economist with ABC Bullion, Australia, said:
The Fed meeting is the next likely catalyst for gold. There is a good chance that gold will stay range-bound around $1,245-$1,265 for some time unless the markets take a major lead out of the meeting.
If the Fed do indeed deliver a positive speech tonight and signal that further rate hikes are on the way, the one thing that may save the gold price from falling too far is the upcoming French elections which is expected to cause uncertainty in financial markets and keep the precious metal well supported,
Sam Laughlin, senior precious metals trader, MKS PAMP Group, said:
The yellow metal is finding it difficult to move away from $1,250 amid firming global equity markets ... Should we see any surprises from the Fed to push gold below the 200-day moving average, expect the next target on the down-side to sit around $1,230 - $1,235, however, risks surrounding the upcoming French election should temper declines.