Gold Price Drops as USD Rebounds Amid Strong ISM Data

The price of Gold (XAU/USD) dropped by 0.12% on Monday to $4,037 as the US Dollar (USD) rebounded after a month-and-a-half low. The decline in Gold prices coincided with strong data from the Institute for Supply Management (ISM), which reported that the Manufacturing Purchasers Managers Index (PMI) expanded at its fastest pace in four years.

The ISM's PMI rose from 53.3 to 55.6, surpassing forecasts of 54. The employment sub-component showed growth for the first time since 2023, although prices paid suggest input costs remain high. This data suggests sustained demand and clarity on tariffs, leading to a repricing for a less hawkish Federal Reserve.

The uncertainty surrounding the US-Iran conflict remains high, with a potential jump in energy prices opening the door to higher interest rates. However, this could prompt a repricing towards a more hawkish Fed.