Gold Steadies as Investors Weigh Fed Rate Outlook

Gold remained steady above $2,490 per ounce on Wednesday after recent declines, as investors evaluated new economic data and its implications for the Federal Reserve's interest rate decisions. ISM data revealed that US manufacturing activity dropped more than anticipated in August, underscoring the sector's struggles and challenging the view that the US economy is robust enough to handle higher borrowing costs. At the same time, expectations for a dovish shift were moderated by an increase in prices for goods producers that surpassed expectations. Investors are now looking ahead to further economic indicators, including the crucial jobs report later this week, which will shed light on the labor market’s performance following the subdued July report and the significant downward revision of payroll figures for the year ending March 2024. Despite this, markets continue to anticipate a 100 basis point reduction in rates from the Fed over its remaining three meetings this year, which would decrease the opportunity cost of holding non-interest-bearing assets.

Technically the first support level is at 2,485. If this level is breached, the next supports to watch will be 2,475 and 2,430. On the upside, the initial resistance is at 2,505; if this level is surpassed, the next targets will be 2,530 and 2,550.