Gold Price Forecast: XAU/USD battle with $2,530 continues ahead of US PCE inflation data
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UPGRADE- Gold price rebound falters as the focus shifts to US core PCE inflation data.
- The US Dollar holds weekly gains amid flattish Treasury yields, upbeat mood.
- Will Gold price yield an upside breakout to clinch fresh record highs? RSI stays bullish.
Gold price is back in the red early Friday, having run into stiff resistance once again near $2,530 on Thursday. Gold buyers turn cautious and refrain from placing fresh bets heading into the US core Personal Consumption Expenditures (PCE) inflation showdown.
Gold price looks to US PCE inflation for fresh direction
The core PCE Price Index, the US Federal Reserve’s (Fed) preferred inflation measure, is the most relevant economic data release this week, and will help determine the Fed interest-rate cut prospects beyond September.
This data will be closely scrutinized, especially after Thursday’s upward revision to the US second-quarter Gross Domestic Product (GDP) data, which cooled off market expectations of a big rate cut in September.
The US economy grew last quarter at an annual pace of 3%, fueled by strong consumer spending and business investment, an upgrade to the government’s initial reading of 2.8%. Markets price in only 34% odds of a 50 basis point (bp) cut next month, down from 38% a day earlier, according to the CME Group's FedWatch Tool.
In the aftermath of the US GDP revision, the US Dollar rebounded firmly, tracking the ongoing recovery in the US Treasury bond yields across the curve. However, that failed to deter Gold buyers, as they tested record highs at $2,532 yet again.
Gold price capitalized on renewed geopolitical concerns between Russia and Ukraine after the Ukrainian military struck oil and artillery depots in Rostov Kirov and Voronezh regions on Thursday. Simmering Israel-Iran tensions also keep the haven demand for Gold price alive and kicking.
Further, cooling inflation in Spain and Germany fanned expectations that the European Central Bank (ECB) could lean in favor of a rate cut in September. Renewed hopes of a low interest-rate regime worldwide also fuelled the Gold price upswing.
However, Gold price has paused its recovery momentum early Friday, as traders remain expectant of a hot US PCE inflation print, which could pour cold water on the bets for the Fed’s further easing later this year.
The headline PCE Price Index is seen rising at an annual pace of 2.6% in July while the core PCE index is expected to increase by 2.7% YoY in the same period. The previous readings were 2.5% and 2.6% respectively.
Apart from the US PCE inflation data, Gold price could also be influenced by the end-of-the-month flows and position adjustments ahead of next week’s Nonfarm Payrolls release.
Gold price technical analysis: Daily chart
With Gold price extending its consolidative phase this week, the US PCE inflation data may trigger a range breakout.
That said, risks for an upside break appear likely, as the symmetrical triangle breakout is in play and the 14-day Relative Strength Index (RSI) holds the fort well above 50.
Gold buyers retain control so long as they hold above the triangle resistance-turned-support near $2,470.
The 21-day Simple Moving Average (SMA) closes in on that area, making it a strong support.
The initial demand area is seen at the $2,500 threshold for Gold price, below which the August 23 low of $2,485 will be tested.
A sustained breach of the latter could expose the downside toward the abovementioned triangle resistance-turned-support near $2,470.
On the flip side, Gold buyers need to clear the record high of $2,532 on a daily closing basis to take on the next key barrier at the $2,550 level.
Acceptance above the latter could challenge the $2,600 round level en route to the triangle target, measured at $2,660.
Economic Indicator
Personal Consumption Expenditures - Price Index (YoY)
The Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The YoY reading compares prices in the reference month to a year earlier. Price changes may cause consumers to switch from buying one good to another and the PCE Deflator can account for such substitutions. This makes it the preferred measure of inflation for the Federal Reserve. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Fri Aug 30, 2024 12:30
Frequency: Monthly
Consensus: 2.6%
Previous: 2.5%
Source: US Bureau of Economic Analysis
- Gold price rebound falters as the focus shifts to US core PCE inflation data.
- The US Dollar holds weekly gains amid flattish Treasury yields, upbeat mood.
- Will Gold price yield an upside breakout to clinch fresh record highs? RSI stays bullish.
Gold price is back in the red early Friday, having run into stiff resistance once again near $2,530 on Thursday. Gold buyers turn cautious and refrain from placing fresh bets heading into the US core Personal Consumption Expenditures (PCE) inflation showdown.
Gold price looks to US PCE inflation for fresh direction
The core PCE Price Index, the US Federal Reserve’s (Fed) preferred inflation measure, is the most relevant economic data release this week, and will help determine the Fed interest-rate cut prospects beyond September.
This data will be closely scrutinized, especially after Thursday’s upward revision to the US second-quarter Gross Domestic Product (GDP) data, which cooled off market expectations of a big rate cut in September.
The US economy grew last quarter at an annual pace of 3%, fueled by strong consumer spending and business investment, an upgrade to the government’s initial reading of 2.8%. Markets price in only 34% odds of a 50 basis point (bp) cut next month, down from 38% a day earlier, according to the CME Group's FedWatch Tool.
In the aftermath of the US GDP revision, the US Dollar rebounded firmly, tracking the ongoing recovery in the US Treasury bond yields across the curve. However, that failed to deter Gold buyers, as they tested record highs at $2,532 yet again.
Gold price capitalized on renewed geopolitical concerns between Russia and Ukraine after the Ukrainian military struck oil and artillery depots in Rostov Kirov and Voronezh regions on Thursday. Simmering Israel-Iran tensions also keep the haven demand for Gold price alive and kicking.
Further, cooling inflation in Spain and Germany fanned expectations that the European Central Bank (ECB) could lean in favor of a rate cut in September. Renewed hopes of a low interest-rate regime worldwide also fuelled the Gold price upswing.
However, Gold price has paused its recovery momentum early Friday, as traders remain expectant of a hot US PCE inflation print, which could pour cold water on the bets for the Fed’s further easing later this year.
The headline PCE Price Index is seen rising at an annual pace of 2.6% in July while the core PCE index is expected to increase by 2.7% YoY in the same period. The previous readings were 2.5% and 2.6% respectively.
Apart from the US PCE inflation data, Gold price could also be influenced by the end-of-the-month flows and position adjustments ahead of next week’s Nonfarm Payrolls release.
Gold price technical analysis: Daily chart
With Gold price extending its consolidative phase this week, the US PCE inflation data may trigger a range breakout.
That said, risks for an upside break appear likely, as the symmetrical triangle breakout is in play and the 14-day Relative Strength Index (RSI) holds the fort well above 50.
Gold buyers retain control so long as they hold above the triangle resistance-turned-support near $2,470.
The 21-day Simple Moving Average (SMA) closes in on that area, making it a strong support.
The initial demand area is seen at the $2,500 threshold for Gold price, below which the August 23 low of $2,485 will be tested.
A sustained breach of the latter could expose the downside toward the abovementioned triangle resistance-turned-support near $2,470.
On the flip side, Gold buyers need to clear the record high of $2,532 on a daily closing basis to take on the next key barrier at the $2,550 level.
Acceptance above the latter could challenge the $2,600 round level en route to the triangle target, measured at $2,660.
Economic Indicator
Personal Consumption Expenditures - Price Index (YoY)
The Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The YoY reading compares prices in the reference month to a year earlier. Price changes may cause consumers to switch from buying one good to another and the PCE Deflator can account for such substitutions. This makes it the preferred measure of inflation for the Federal Reserve. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Fri Aug 30, 2024 12:30
Frequency: Monthly
Consensus: 2.6%
Previous: 2.5%
Source: US Bureau of Economic Analysis
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