Gold Surges on US Economic Uncertainty

The US economy's mixed signals have created uncertainty for investors, and gold prices are benefiting from this volatility. The ISM Manufacturing PMI rose to a new high since May 2022 at 55.6, but nonfarm payrolls declined by 23,000 in July, their lowest level in a year. This unexpected weakness directly lowered rate hike expectations, causing the US Dollar Index to fall and US Treasury yields to decline.

New York Fed President Williams stated that if inflation doesn't retreat as expected, the Fed will raise rates. However, divergences within the Federal Reserve have widened, making policy uncertain. Geopolitically, US-Iran negotiations are ongoing, but tensions remain high in the Strait of Hormuz.

The People's Bank of China increased its gold reserves to 76.08 million ounces for the fifth consecutive month at the end of July. Central banks were net buyers of a record 289 tonnes of gold in the second quarter, despite recent gold ETF outflows.