Gold holds steady despite strong dollar

LONDON (May 15) Gold prices showed resilience on Monday, as they edged lower following last week's selling pressure. The market witnessed a redirection of safe haven demand towards the dollar due to concerns over slowing economic growth and high interest rates. However, despite the strength of the dollar, gold XAUUSD managed to hold its ground above the $2,000 mark and remains well-supported.

Investors are now eagerly awaiting insights from various Federal Reserve speakers throughout the week, with Chair Jerome Powell's remarks on Friday being of particular interest.

At 00:15 GMT, spot gold experienced a minor decline of less than 0.1%, settling at $2,009.99 per ounce. Meanwhile, gold futures also dropped 0.3%, reaching $2,014.60 per ounce.

The United States continues to witness signs of deteriorating economic conditions, with recent data indicating a worsening consumer sentiment in May. Inflation remains persistent, and the job market is exhibiting signs of a slowdown. To gain a clearer picture of the US economy, market participants are eagerly awaiting the release of crucial data on manufacturing, retail sales, and industrial production throughout the week. The Federal Reserve has already expressed caution about the possibility of a mild recession occurring this year.

In addition to concerns over the US economy, market anxiety has been further fueled by the ongoing debate among policymakers regarding the raising of the debt ceiling. Worries of a potential US debt default have added to the unease, as well as renewed fears of a banking collapse in the country.

Initially, these factors drove strong demand for gold as a safe haven. However, over the past week, traders have been unwinding this trend, prompted by expectations that the Federal Reserve will maintain higher interest rates for a longer period. As a result, the dollar has strengthened, recording its best performance since September.

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