Gold prices continued their slide for the fourth consecutive session on Monday amid U.S. political uncertainty that saw President Joe Biden drop his reelection bid a day earlier.
Meanwhile, traders will be closely watching economic data expected this week on the preliminary S&P Global PMI, second-quarter GDP, and June’s critical personal consumption expenditure price index – the Fed’s preferred method of measuring inflation.
Gold sank below the key $2,400 support level in midday trading, down $18.13 at $2,393 per ounce – a dramatic turnaround for the yellow metal after it hit an all-time high of $2,483 per ounce last Wednesday. Silver, meanwhile, wasn’t faring much better, as concerns about demand from China continued to weigh on the gray metal. It was trading down more than 1% on the day at $29.11 per ounce.
Political uncertainty surrounding the U.S. election continued to pressure gold a day after President Biden dropped his reelection bid at the head of the Democratic ticket and threw his support behind Vice President Kamala Harris only a few weeks out from the Democratic National Convention in Chicago. The party was still in a tailspin Monday as Harris looked to consolidate support for her election bid even as several key party members came up short of endorsing her, including former President Barack Obama. In a statement on Sunday, Obama expressed “extraordinary confidence that the leaders of our party will be able to create a process from which an outstanding nominee emerges.”
The tentative political climate could continue to weigh on commodities like gold until Democrats answer more questions on a clear nomination plan.
With the Fed entering its blackout period heading into the July 30-31 Federal Open Market Committee meeting, traders are focusing on key economic data this week that could reinforce their hopes of at least one – perhaps multiple – interest rate cuts later this year.
Chief among the reports will be Friday’s core PCE index – the preferred method used by the Fed to measure inflation. May’s PCE index showed that core inflation had cooled to 2.6% year over year, representing a decrease from April’s year over year figure of 2.8%.
Gold Price Chart
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