The ISM PMI release saw betting jump that the Federal Reserve will cut overnight interest rates by half-a-point when it starts easing monetary policy from a 2-decade high at its September meeting in 2 weeks' time, putting the odds at 41% according to derivatives exchange the CME's FedWatch tool, the highest likelihood since the middle of last month.

 

With the Fed due to update its own interest-rate outlook – last put at 5.1% for Christmas this year – as well as its economic and inflation forecasts in the 'dot plot' predictions set to accompany this month's policy decision, that left betting on the US central bank's end-year rate unchanged around 4.34%, down 1 whole percentage point from current levels.

 

 

Gold prices had already fallen through the $2500 level ahead of the ISM PMI data, briefly bouncing to $2485 per Troy ounce but then trading down at $2476 again.

 

"$2500 is wholly psychological," said a note overnight from Swiss bullion refining and finance group MKS Pamp's strategist Nicky Shiels. "Don't underestimate its ability to draw in generalists" who typically invest in other assets instead.

 

"[That's why] we remain dip buyers," says Shiels, "cognizant of not chasing rallies given [gold's] tactical headwinds" – most notably a seasonal run of falling in price every September since 2017 – plus this week's upcoming US data and then the Federal Reserve decision in a fortnight's time.

 

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Also awaiting this week's US jobs data – which includes the 'Jolts' job openings report for July tomorrow, followed by the ADP and then BLS non-farm payrolls estimates for August on Thursday and Friday – "Gold's tailwinds remain stronger than the headwinds for professional investors," says chief analyst Rhona O'Connell at brokerage StoneX.

 

But "the price-elastic markets in Asia are mixed; there has been some light resale [while] in other areas there is some fresh interest in expectation of higher prices yet."

 

Gold's No.1 consumer nation China today saw Yuan prices in Shanghai rise ¥1 per gram from Monday's 2-week low of ¥569. But against Dollar prices in London – the precious metal's key trading and storage hub – Shanghai gold held at a discount for the 12th session running, pulling its average across the past month into negative territory for the first time since April 2022 on a 22-trading day basis with its deepest gap beneath London since July 2021

 

Gold in India – its No.2 consumer market – ended last week $8 per ounce below London quotes according to Reuters, or another $8 cheaper again on figures from the mining industry's World Gold Council, despite anecdotal reports of stronger household demand following July's sudden and steep cut to India's bullion import duty.

 

"Particularly advantageous" ahead of India's autumn festival and wedding season, "This move was unprecedented," says specialist consultancy Metals Focus, "representing the steepest cut in the history of the Indian gold market...further increasing optimism across the gold industry."

 

Gold inflows to India through Ahmedabad's Air Cargo Complex leapt by 4.2 times last month compared to August 2023, while new duty-free trading facility the India International Bullion Exchange – from which domestic buyers can take delivery, triggering import duty and tax – saw its heaviest-yet inflow.

 

Like gold prices, Western stock markets fell further Tuesday from August's new record highs, pulling the MSCI World Index 0.7% lower even as longer-term interest rates fell in the bond market following the ISM PMI news.

 

Wholesale bullion silver prices meantime sank to 2.5-week low beneath $27.75 per Troy ounce as industrial metal and energy prices also fell, pulling Bloomberg's Commodities Index more than 10% down from May's near 2-year high amid reports of ballooning stockpiles in China.

 

Crude oil prices today hit new 2024 lows and copper fell back towards mid-August's 5-month low, trading nearly 1/4 beneath May's all-time high after US investment bank Goldman Sachs slashed its formerly bullish year-end copper price forecast by 1/3rd.