A leading gauge of US manufacturing activity fell from a near three-year high in July amidst tepid new orders, while consumer spending remained largely unchanged in the prior month. Apart from implying economic expansion remained moderate during the third quarter, it further decreased the odds of a Fed rate increase. According to the Chicago Mercantile Exchange’s FedWatch tool, the probability of another quarter-point rate rise before year end has been slashed to around 42.50%, compared with a 50.60% likelihood, a month ago.
Gold is typically inversely related to US interest rates as higher rates dull the appeal of the non-yielding metal in favour of interest-bearing assets. XAUUSD was last seen around the $1266 per ounce-mark, with strong overhead resistance at $1275. Bullion is likely to remain range bound until Friday's all-important US jobs report.