US Dollar Rebound Pressures Gold

The US Dollar Index staged a modest comeback on Monday, recovering ground after a sell-off late last week that was triggered by joint intervention from Washington and Tokyo to support the Japanese Yen. This dollar rebound was supported by stronger-than-expected US manufacturing data. The strengthening greenback, in turn, placed downward pressure on gold prices, which retreated from recent highs.

Geopolitical Developments Influence Sentiment

Geopolitical factors remain a key focus, with markets closely watching US-Iran relations after a recent pause in hostilities. US President Donald Trump stated that talks are underway with Iran at Tehran's request, describing the discussions as a "final opportunity" for the Islamic Republic. This uncertainty surrounding the negotiations is contributing to market fluctuations and influencing safe-haven asset demand.

Economic Data Clouds Fed Outlook

Recent economic indicators are influencing the outlook for Federal Reserve policy, with a stronger-than-expected US manufacturing report complicating the path for future rate adjustments. In other economic news, a Fed survey found stable lending standards for many types of commercial and industrial loans. Separately, the US Treasury announced it was raising its borrowing estimate for the third quarter to $739 billion.