World gold prices continued to face pressure in the trading session on May 22 as investors focused on rising US bond yields, stronger USD, and geopolitical risks in the Middle East.
At the recorded time (0:10 AM on May 22 - Vietnam time), spot world gold prices fluctuated around the threshold of 4:516.7 USD/ounce, down 27 USD compared to the previous session. Spot silver prices also retreated to around 75 USD/ounce.
According to the latest report from the Federal Reserve Bank of Philadelphia (Fed Philadelphia), manufacturing activity in this region suddenly weakened sharply in May. The manufacturing business outlook index fell to negative 0.4 points, much lower than the 26.7 points of the previous month and contrary to the forecast of 17.6 points from analysts.
The Philadelphia Fed said component indices such as new orders and freight operations fell sharply. The new order index fell to negative 1.7 points from 33 points in April, while the freight index fell to 4.9 points from 34 points previously.
The labor market in this region has also not shown clear positive signs. The job index is still at negative 2.8 points, although slightly improved compared to negative 5.1 points last month.
Inflation pressure also shows signs of cooling down when the input price index decreased to 47.9 points, lower than the 59.3 points of April.
Usually, weak economic data will support gold as it increases expectations of the Fed easing monetary policy. However, in the current context, the gold market is still under great pressure from the 10-year US Treasury bond yield maintained around 4.6% along with the rise of the USD.
In addition to the interest rate factor, investors are also closely monitoring the developments of US-Iran tensions. After the signal of cooling down in oil transportation through the Strait of Hormuz appeared, the energy market quickly reversed when the Iranian Supreme Leader declared that enriched uranium must continue to be kept in the country.
This information caused oil prices to rise again. WTI oil exceeded the 100 USD/barrel mark, while Brent oil approached 107 USD/barrel. The upward momentum of oil prices raised concerns about prolonged inflation, thereby strengthening expectations that the Fed will maintain high interest rates for longer.
US economic data released on the same day showed a mixed picture. The number of initial jobless claims decreased to 209,000, showing that the labor market is still relatively stable. Meanwhile, the number of houses started in April decreased by 2.8%, reflecting the stagnant construction sector.
On the stock market, US stock futures simultaneously decreased before opening. Investors were cautious as oil prices and bond yields both increased sharply.
Technically, experts believe that gold buyers need to bring prices back to the resistance zone of 4,531 - 4,546 USD/ounce to regain the upward momentum. If successfully surpassing this area, gold prices may head towards the milestones of 4,573 USD and 4,600 USD/ounce.
In the opposite direction, if the support level of 4,500 USD/ounce is broken, gold prices are at risk of falling further to the 4,401 USD/ounce zone.
