Gold Eyes $3,350 Support Amid Tensions

Business activity in the U.S. continued to expand in June, according to preliminary data released Monday (June 23) by S&P Global. Both manufacturing and services sectors outperformed expectations. However, a sharp increase in input and output prices raised fresh concerns over rising inflation in the second half of the year, potentially delaying the Federal Reserves rate cut timeline.

S&P Global‘s flash U.S. Manufacturing Purchasing Managers’ Index (PMI) for June held steady at 52.0—its highest level since February 2023 and above market expectations of 51.0. This indicates sustained expansion in the manufacturing sector, driven by restocking efforts and rebounding domestic demand. Factory employment also grew at the fastest pace in over a year as firms ramped up hiring.

Despite weaker export demand, analysts noted that strong domestic consumption prompted firms to expand capacity. Still, they warned that recent increases in production and inventory were largely influenced by inflation expectations and tariff concerns, with this momentum potentially fading in the months ahead.

[U.S. - Manufacturing PMI Chart]

• June Manufacturing Input Costs Index surged from 64.6 in May to 70.0—the highest level since July 2022.

• Over 60% of manufacturers attributed cost increases to new import tariffs implemented under the Trump administration.

• More than half of respondents said they had already raised prices to offset these costs.

In the services sector, pricing pressures were similarly pronounced. Although the rate of increase in input and selling prices slightly eased compared to May, businesses still cited tariffs, fuel, wages, and financing costs as key inflationary drivers. Overall, both goods and services price indices remain historically high, leaving many firms with no choice but to pass rising costs on to consumers.

[Gold Technical Analysis]

Geopolitical tensions in the Middle East continue to pose upside risks to inflation, which may restrict the Federal Reserves ability to ease policy in the near term. Most market participants now expect the Fed to delay any rate cuts until the end of the year. In particular, surging gold prices—fueled by rising conflict risk—could further reinforce inflationary pressures.

On the 1-hour chart, gold is currently testing key support at $3,350/oz. A break below this level could signal further downside, presenting an opportunity to short the metal in line with the prevailing trend.

• Resistance: $3,400/oz

• Support: $3,350/oz

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