Gold price (XAU/USD) is facing immense pressure in early Asia as United States inflationary pressures have propelled after the announcement of a surprise production cut by the OPEC on weekend. The precious metal has dropped firmly to near $1,960.00 on hopes that the Federal Reserve (Fed) would keep rates higher for a longer period. Expectations of a fresh impulse in US inflation led by higher oil prices after a sudden production cut are going to phase out odds of a steady monetary policy by the Fed in May.

According to Reuters, the oil cartel will cut the overall oil production by around 1.16 million barrels/day (bpd), which will lead to the overall pledge of production cut to 3.66 million bpd.

The US Dollar Index (DXY) has extended its upside momentum above 102.70 on expectations of the continuation of the 25 basis points (bps) rate hike spell by the Federal Reserve (Fed). This would push interest rates to 5.00-5.25%. S&P500 futures have dropped heavily in early Asia after a decent winning spree, portraying a caution in the overall risk-appetite theme.

A power-pack action in the USD Index would continue ahead of the release of the US ISM Manufacturing PMI data. As per the estimates, the Manufacturing PMI is expected to decline marginally to 47.5 from the former release of 47.7. This could be the fifth consecutive figure below 50.0, which itself is considered a contraction in manufacturing activities.

Apart from that, the Manufacturing New Orders Index will be keenly watched. The economic data provide cues about forward demand for goods, which is likely to contract firmly to 44.6 vs. the prior release of 47.00. Subdued consensus for the US Manufacturing PMI could be the outcome of higher interest rates by the Fed for bringing down persistent inflation.