Gold prices rose 0.5% on Monday, heading for the second consecutive session of gains, and are trading near the key level of $4,400 per ounce.
The yellow metal is currently trading above the weekly pivot point of $4,379, as it looks to test the first weekly resistance level at $4,447. Breaking above this level is likely to lead to further gains, with the next resistance level at $4,518.
If gold fails to maintain trading above the weekly pivot point of $4,379, it will test support levels near $4,309 and then $4,240.
In terms of geopolitical tension, The United Arab Emirates said on Saturday Iran had attacked an Abu Dhabi National Oil Company vessel while it was transiting the Strait of Hormuz a day earlier, the Emirati state news agency WAM reported.
Iran’s Revolutionary Guards have previously threatened action against vessels transiting the strait if they are linked to Tehran’s adversaries or fail to comply with Iranian directives.
The attack was the third such incident involving ADNOC vessels in less than a week, and the UAE had also accused Iran of being behind the earlier incidents.
Anwar Gargash, diplomatic adviser to the UAE president, said Abu Dhabi would defend its sovereignty and interests after repeated attacks on ADNOC vessels.
On the economic data front, traders will have the chance to parse through preliminary readings of business activity in the U.S. and a clutch of other countries for August.
So far, this data has held up relatively well in the face of an energy shock sparked by the Iran war, as well as wagers that central banks could roll out potential interest rate hikes in response.
In July, the composite purchasing managers’ index, which combines figures from both the manufacturing and services sectors, reached its highest level since the start of the year in the U.S., analysts at Deutsche Bank noted.
August’s U.S. services PMI from S&P Global is tipped to cool slightly to 53.9, while manufacturing is seen edging higher to 54.0. A level above 50 denotes expansion.
Beside that, bets on a possible Federal Reserve interest rate increase in the coming months have faded in the wake of recently soft labor market data and mild inflation figures.
Such pricing could receive another test this week, when the Fed releases minutes from its July policy meeting. At the gathering, the Fed stood pat on rates, but bond markets gyrated after the decision as markets puzzled over comments from Fed Chair Kevin Warsh.
Warsh, in what has become a common characteristic of his nascent tenure at the helm of the central bank, offered traders no clues about plans for future interest rate decisions, saying only that the Fed will “not waver” in its commitment to bringing inflation back down to its 2% target.
Devoid of forward guidance, investors will likely turn to the minutes to scratch together a rough picture of what the Fed could do in the months ahead. Notably, Warsh described the meeting as a “good family fight,” with three members dissenting to the rate hold in favor of a 25-basis point hike.