Gold Prices Dip 0.1% Amid Market Adjustments, Weak US Data May Boost

During the Asian morning session, gold prices experienced a slight decline, with spot gold prices falling by 0.1% to 3,314.76 dollars per ounce. This minor dip was potentially due to position adjustments in the market. However, the release of weak U.S. economic data the previous night may provide support for gold prices.

The recent data on initial jobless claims and continuing jobless claims suggested a weakening labor market. Additionally, although the first-quarter GDP data was slightly revised upwards, it confirmed a contraction, reinforcing the view of an economic slowdown. The combination of a strained labor market and economic contraction, despite the slight upward revision in GDP data, has laid the groundwork for gold to regain favor.

Earlier in the week, gold prices had dipped to around 3,250 dollars per ounce, driven by the strengthening of the U.S. dollar amid escalating trade tensions. These tensions put pressure on currencies closely linked to China's economy, such as the New Zealand dollar. However, the U.S. Federal Trade Commission's rejection of certain tariffs helped ease trade concerns, reducing the demand for gold as a safe-haven asset.

The release of weak U.S. economic data further exacerbated the decline in gold prices, indicating a slowing economy and reduced consumer spending. This data led to market expectations of potential interest rate cuts by the Federal Reserve later in the year, which in turn put downward pressure on U.S. Treasury yields and the U.S. dollar. The combination of these factors created a challenging environment for gold prices, which struggled to maintain their support levels.

Despite the initial decline, gold prices showed signs of recovery later in the session, rising back to around 3,270 dollars per ounce. This recovery was likely driven by the continued uncertainty surrounding global trade relations and the potential for further economic slowdowns. Investors remained cautious, closely monitoring the release of additional economic data and geopolitical developments that could impact gold prices in the coming days.