Gold rebounds from a one-week low and rises with the release of purchasing managers' index indicators.

Gold prices rose during trading on Monday, as the price of the yellow metal rebounded from its lowest levels in a week to recover today amid cautious investors reacting to the release of Purchasing Managers' Index (PMI) indicators for several major economies today, just two days ahead of the US Federal Reserve's interest rate decision.

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In terms of trading, spot gold prices increased by 0.57% to record $2,663.98 per ounce, while gold futures contracts for delivery in February rose by 0.20% to reach $2,681.84 per ounce.

What Influenced Gold Movements Today?

PMI indicators released in Europe this morning showed a clear slowdown in manufacturing activity across the continent, with the manufacturing sectors remaining in contraction territory and only slight improvements observed in the services sectors of these countries, particularly Germany, France, and the UK, alongside a sharp decline in private sector employment within the UK and the Eurozone as a whole.

These negative data highlighted the struggles faced by the economic activities in Europe, casting a gloomy outlook on the continent's economic situation. This was reinforced by confirmed statements from European Central Bank Governor Christine Lagarde and last week’s negative growth data from the UK, which bolstered the demand for gold as a safe haven among investors today.

This came at a time when government data released this morning showed that the Chinese economy still suffers greatly from weak demand and domestic consumption, despite major stimulus measures announced by the Chinese government in recent months to support activity and consumer spending. The data also indicated lower-than-expected growth in retail sales in the country for the month of November.

At the same time, U.S. Treasury yields declined during today’s trading, with the 10-year benchmark yields falling by 0.52% to record 4.375%. Additionally, the yields on two-year Treasury notes—considered an indicator of expectations for Federal interest rates—decreased by 0.45% to 4.222%, amid forecasts of an upcoming interest rate cut at this week’s Federal Open Market Committee meeting, which provided additional support for gold.

On another front, the recent escalations in geopolitical tensions, especially with intensifying actions in the Russia-Ukraine war, have heightened investors' demand for gold as a safe haven, amidst a wave of caution also driven by anticipation of the U.S. Federal Reserve's interest rate decision later this week.