Gold rallies as recession prospects loom

Gold prices finished in the green today, June 5, as investors assessed prospects of the Federal Reserve skipping interest rate hikes at the coming meeting after the release of weak economic data.

Investor appetite for gold mounted as the US dollar trimmed its gains after the issuance of data that reflected the aftermath of the continued tightening of monetary policy, besides the consequent economic slump.

US Census Bureau data showed growth in new orders for manufactured goods contracted by 0.4% in April, after rising by 0.6% in March, against estimates for a 0.5% uptick.

Other readings indicated that the US services sector slowed more than expected in May as demand cooled, with the non-manufacturing Purchasing Managers Index (PMI) falling month-on-month (MoM) to 50.3 points.

This came after the growth in new orders slowed MoM to 52.9 points in May, according to a survey by the Institute for Supply Management (ISM).

Markets are pricing in an 80% chance that the Federal Reserve will fix interest rates during the policy meeting slated for this month, keeping the current range of 500 and 525 basis points, according to the CME FedWatch Tool.

Bullion for August delivery climbed 0.20%, or $4.70, to close at $1,974.3 an ounce, after touching the $1,953.8 level in early trading.

Meanwhile, the US dollar index, which gauges the greenback's strength against a basket of six currencies, kept flat at 104.03 points at 08:44 pm Makkah time, down from the 104.40 points recorded during the session.