GOLD Price Holds Steady Amid Market Inaction and US Holidays

Gold Price (XAU/USD) continues to show strength for the fourth consecutive day, although it lacks upward momentum around the $1,923 level as we approach Tuesday's European session. This lack of momentum can be attributed to the US holidays and a relatively light economic calendar elsewhere, which have resulted in a market that appears to be inactive.

However, traders remain active due to concerns about the global economic slowdown and the state of US-China relations. Additionally, the recent decision by the Reserve Bank of Australia (RBA) to not raise interest rates for the third consecutive time has contributed to the market's favorable momentum. This decision by the RBA goes against the general consensus and has surprised many market participants.

One factor that has caused some alarm is the inversion between the US 10-year and two-year Treasury bond yields, which has reached its highest level since 1981. This inversion has renewed fears of a potential recession. Reuters reported that "the yield curve briefly inverted to 42-year lows Monday as investors increasingly expect the Fed to raise its benchmark borrowing rates to keep inflation in check." The two-year Treasury bond yields dropped to 4.85%, while the 10-year yields fell to 3.78%. It's important to note that both of these benchmark yields ended Monday's trading at around 4.93% and 3.86%, respectively.

In addition, the ongoing tensions between the US and China have escalated, providing further support for the Gold Price. US Treasury Secretary Janet Yellen's visit to Beijing has attracted attention, with the US Treasury Department stating that Yellen had a "frank and productive" discussion with China's Ambassador. The news also highlighted that Yellen raised concerns and emphasized the importance of the two countries working together.

Similarly, the Wall Street Journal (WSJ) reported that the Biden administration is preparing to restrict Chinese companies' access to US cloud-computing services, a move that could strain relations between the world's economic superpowers.

Despite the sluggish markets, the negative US data has failed to dampen expectations of a hawkish stance by the Federal Reserve, and this has not deterred Gold buyers. On Monday, the US ISM Manufacturing PMI for June dropped to its lowest level in three years, remaining below the 50.0 level for the seventh consecutive month, with a reading of 46.0 compared to the expected 47.2 and the previous figure of 46.9. Furthermore, the S&P Global Manufacturing PMI for June confirmed a figure of 46.3, the lowest in five months. On a positive note, Construction Spending improved by 0.9% MoM for May, surpassing the expected 0.5% and the previous 0.4% readings.