Gold Tumbles to 7-Week Low

Gold has been struggling since the past few sessions amid a still-firming dollar and a marked reduction in tensions on the Korean peninsula. The greenback climbed on Monday against most major currencies after stronger than expected US manufacturing data was released. The sentiment in bullion was also hit after Dallas Federal Reserve President Robert Kaplan said the Central Bank needs to “look hard” at whether it should hike interest rates in December. Higher rates typically tend to lift the dollar and push yields up, both of which historically have proven to be headwinds for gold. XAUUSD is currently trading around $1272.00 per troy ounce with $1268.00 representing the immediate downside support.  The short-term trend is decisively bearish, meaning any breach of support could see gold prices slip towards levels closer to $1260.00 per ounce.

Denting hopes of a boost from the weaker Pound, UK manufacturing growth cooled in September as cost pressures mounted according to a widely-followed survey. The Markit UK Manufacturing PMI fell to 55.9 last month from a downwardly revised 56.7 in August, falling short of the of 56.4 consensus estimate from a Reuters survey of economists. However, the figure easily topped the 50-threshold that signals expansion, with Markit noting that the sector was still expanding “at a solid clip” on the back of increasing production and new order growth. Official economic growth figures published last week showed manufacturing output contracting by -0.30% during the second quarter from the prior quarter. Further indications of the health of British industry will be forthcoming with PMIs for the construction and service sectors scheduled for release on Tuesday and Wednesday. FTSE 100 futures are gaining early Tuesday to trade around 7397.00.