Gold (XAU/USD) has dipped to the $2,640s per troy ounce on Thursday as it continues to consolidate below last week's record high of $2,685. Sellers currently have the upper hand over buyers, as expectations diminish that the Federal Reserve (Fed) will aggressively cut interest rates in the United States, which diminishes the appeal of non-interest-bearing assets like Gold.
Recent data supports the notion that the US economy is performing relatively well, highlighted by an increase in activity within the Services sector for September.
The ISM Services Purchasing Manager Index (PMI) rose to 54.9 in September, up from 51.5 in August, exceeding the forecast of 51.7, according to the Institute of Supply Management (ISM) data released on Thursday.
However, the ISM Services Employment Index dropped to 48.1, falling below the previous month’s reading of 50.2.
Meanwhile, the ISM Prices Paid Index increased to 59.4 from 57.3 previously, surpassing the expected rise to 56.3.
This data follows a decline in S&P Global’s Composite PMI for the US, which fell to 54.0 from 54.2, matching expectations, while the S&P Services PMI decreased to 55.2 from 55.4, also in line with forecasts for September.
Despite the downward movement in Gold prices, its decline is somewhat cushioned by two significant factors: safe-haven demand for Gold amid fears of escalating conflict in the Middle East, and the overall trend of decreasing global interest rates, which, despite the Fed’s newfound caution, helps maintain Gold's attractiveness to investors.
