(Kitco News) - The gold market continues to struggle to attract a consistent safe-haven bid even as the U.S. manufacturing sector rises at a slower pace than expected.
The Commerce Department announced Thursday that U.S. durable goods orders rose 0.3% in June, following May’s revised drop of 4.0%. The data was weaker than expected, as the consensus view of economists called for an increase of 1.6%.
Core durable goods, which strip out the volatile transportation sector, rose 0.6% last month, also missing consensus forecasts for a 0.9% reading.
The gold market has not seen any significant reaction to the disappointing economic data. Analysts note that weak manufacturing activity should provide some support for the precious metal, because the Federal Reserve will be reluctant to raise interest rates in a slowing economy, even if pressures remain elevated.
Spot gold last traded at $4,087.17, up 0.80% on the day.
Gold has struggled in recent months as the war in Iran has significantly disrupted the global energy market, driving inflation pressures higher, pushing bond yields up and forcing central banks to adopt tightening biases.
Real yields on long-term bonds hit decade-highs last week, raising the opportunity cost of holding gold, a non-yielding asset.
Currently, markets are pricing in a 33% chance of a rate hike this Wednesday and see a roughly 80% chance of higher rates in September. However, many analysts have said that the Federal Reserve can’t afford to raise interest rates, as it could slow down the economy and have little impact on resolving the ongoing energy crisis.
Analysts have said that gold could start attracting new bullish attention when investors realize that the U.S. central bank is stuck in a precarious position.
