Gold is stabilizing around $3,407 after pulling back from the one-month high, with investors looking to the US core PCE inflation figures that will determine the Federal Reserve’s next step. A firming Dollar and stable Treasury yields are keeping prices under pressure, but safe-haven buying, tensions in geopolitics, and rate cut expectations are still favoring Gold’s overall bullish trend.
KEY LOOKOUTS
• Core PCE Price Index released today at 12:30 GMT will be the major determinant of Gold’s future direction.
• A firmer US Dollar and solid Treasury yields are putting pressure on the precious metal.
• Weaker PCE might fuel hopes for a September Fed rate cut, while stronger numbers might limit Gold’s upside.
• Russia-Ukraine tensions and uncertainty surrounding Fed leadership remain supporting safe-haven demand.
Gold is consolidating slightly above the $3,400 level on Friday after pulling back from one-month high of $3,423, as traders become cautious before the release of the US core PCE Price Index. A firmer US Dollar and stronger Treasury yields are behind the pressure on the precious metal, as profit booking contributes to the retreat. The markets look for core PCE to increase 0.3% on a monthly basis and 2.9% on a yearly basis, and the result should influence anticipation for a September Fed rate reduction. Although corrected briefly, geopolitical tensions, issues regarding Fed autonomy, and the general safe-haven nature of Gold remain in favor of its bullish predisposition.
Gold retreats towards $3,400 as investors look to the US core PCE inflation reading, which is a critical indicator of the Fed policy path. The stronger US Dollar and consistent Treasury yields dampen the metal, although its safe-haven status is still intact due to geopolitical and policy risks.
• Gold falls to about $3,407 after Thursday’s one-month high of $3,423.
• A stronger US Dollar and flat Treasury yields are weighing on the metal.
• Expectations for a July US core PCE Price Index increase to 0.3% MoM and 2.9% YoY.
• A softer result can solidify hopes of a September Fed rate cut.
• Improved inflation figures would support the Dollar and add further pressure to Gold.
• Geopolitical uncertainty and concerns of Fed independence sustain safe-haven buying.
• Technical levels of importance: support around $3,400 and $3,395; resistance at $3,423 and $3,450.
Gold is trading close to $3,407 on Friday, falling slightly after hitting a high not seen since late July. The decline comes as market players go cautious in the wake of the release of US core PCE Price Index, the preferred inflation measure of the Federal Reserve, which is likely to indicate a slight increase. A firmer US Dollar and strong Treasury yields are also contributing to the sentiment, while month-end profit-taking added to the decline.
XAU/USD DAILY PRICE CHART
SOURCE: TradingView
In spite of the near-term consolidation, the overall outlook for Gold remains underpinned by enduring geopolitical tensions and uncertainties regarding the independence of the Federal Reserve. Safe-haven buying has been supported by continued tensions in Ukraine and the legal battle over the Fed governor’s removal attempt. Added to the anticipation of policy easing in the second half of this year, these points continue to support Gold’s long-term bullish story across global markets.
TECHNICAL ANALYSIS
Gold is trading just above the $3,400 psychological floor following Thursday’s surge to $3,423, its best level since late July. The Relative Strength Index (RSI) has relaxed from overbought levels to about 61, indicating abating momentum but still in the buyers’ favor. The next support is at $3,400, followed by the 21-period EMA at about $3,395 and the 100-period EMA at about $3,365. On the positive side, there is resistance at $3,423, with a steady break paving the way towards the $3,450 zone. Generally, the technical setup indicates dips can find fresh buying interest if major supports remain intact.
FORECAST
If the coming US core PCE inflation data is softer than anticipated, it might increase speculation for a September Fed rate cut, putting pressure on the US Dollar and increasing Gold demand. In that case, a powerful break above $3,423 could set the stage for further advances to the $3,450 area, continuing to support the bullish momentum as safe-haven demand stays high.
On the other hand, a better-than-anticipated PCE print will likely stem dovish Fed bets, boost the Dollar, and pressure Gold prices. Falling through the $3,400 support level may prompt a retreat back to $3,395 and possibly further to the $3,380–$3,370 region, where renewed buying interest might be seen.
