Gold price remains on the defensive ahead of US GDP data

NEW YORK (May 29) Gold price (XAU/USD) trades in negative territory on Thursday, supported by the firmer US Dollar (USD) and higher US yields. The diminishing expectation of the Federal Reserve's (Fed) rate cut in September exerts some selling pressure on the precious metal as it will increase gold's opportunity costs. 

Investors will monitor the second estimate of the US Gross Domestic Product (GDP) for Q1 2024 on Thursday. In the event that the US economy shows a stronger-than-expected reading, this might further lift the USD and weigh on the USD-denominated gold price. Nonetheless, the ongoing geopolitical tensions in the Middle East might boost traditional safe-haven assets like gold. Also, the rising demand from the central bank might cap the downside for yellow metal in the near term. 

Daily Digest Market Movers: Gold price remains vulnerable amid stronger US data

• The Israeli military said on Wednesday that it established “operational control” over the Philadelphi Corridor, a 14-kilometer (8.7 miles) strip of land along the border between Gaza and Egypt, per CNN. 
• Global physically-backed gold Exchange-Traded Funds (ETFs) witnessed a net outflow of 11.3 metric tonnes last week, according to the World Gold Council. 
• Fed Atlanta President Bostic said on Thursday that the breadth of price gains is still significant, but less inflation breadth would add to confidence for a rate cut. 
• Economic activity continued to expand in the US and prices increased modestly from early April to mid-May. Overall outlooks were more pessimistic amid reports of rising uncertainty and greater downside risks, according to the Fed's Beige Book released Wednesday. 
• Markets are pricing in a 50% chance that the Fed will hold interest rates in September, according to the CME FedWatch Tool.
• The US Gross Domestic Product (GDP) number is estimated to expand at a 1.3% annual pace in the first quarter of 2024.  

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