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Gold supported as equities turn lower

Published on May 31, 2023 18:08

Gold futures are trading mixed in the Asian trading session today, witnessing safe haven demand on back of heavy losses in Japan, Hong Kong, China and other Asian equities as weak factory activity contributed to growing doubts among investors. In May, Chinese manufacturing activity experienced a sharper contraction than anticipated, reflecting weakening demand. The official manufacturing purchasing managers` index (PMI) fell to 48.2, below the forecasted level of 49.4. This decline indicates a decrease in manufacturing output and suggests a challenging economic environment with reduced demand. International gold futures for latest futures contract was last seen trading at $1974.5 down $2.6 or 0.13% an ounce. The metal is seen trading in a narrow range of $1983.60- $1971.80 so far today with the commodity being supported by losses in equities and pulled down by strength in the US dollar.

Greenback continued to trade higher and is about to finish this month with blockbuster gains against other nation currencies. So far this month Euro is down about 3.28% on the greenback to $1.0686 and the yen is down about 3.7% to 139.8 per dollar after hitting a six-month low at 140.93. Domestic gold futures for august delivery are trading down Rs 39 at Rs 59959 per 10 grams on MCX. The international futures are down more than 1% so far this month and are down more than 3% since hitting the low of $1936 whereas domestic gold futures are down less than 0.5% so far this month.

Markets are closely watching the U.S. debt ceiling as an agreement reached between President Joe Biden and the top congressional Republican progresses through Congress. The plan has cleared a House committee and is set for debate and passage on Wednesday. If approved, it will move to the Senate, where the debate could extend into the weekend. Investors are keen to see if the agreement can successfully suspend the United States` borrowing limit.

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