Gold Price Forecast: XAU/USD slips below $1930 after US PCE and UoM Consumer Sentiment

• US Dollar climbs as the Federal Reserve preferred gauge for inflation,  with core PCE creeping lower.
• According to the University of Michigan (UoM) poll, US consumers’ inflation expectations edged lower.
• Gold Price Analysis: The rally from $1,616.71 to $1,949.16 could end, as a doji emerged in the weekly chart.

Gold price falls for the second consecutive day, but it remains above January’s 26 low of $1,918.74 and stays sideways, following the release of inflation data in the United States (US). The US Dollar (USD) shortened its drop during the week, while US Treasury bond yields are rising, two additional reasons behind Gold’s loss of its brightness. At the time of writing, the XAU/USD is trading at $1,924.39 after hitting a daily high of $1,935.06.

US Core PCE, the Fed’s gauge for inflation, cooled down

Wall Street turned green after the US Department of Commerce (DoC) revealed that the US Federal Reserve (Fed) preferred gauge for inflation, the Core Personal Consumption Expenditure (PCE) for December, rose 4.4% YoY, aligned with estimates, but lower than November’s 4.7%. The same report showed that headline inflation climbed 5% on a yearly basis, above the Fed’s 2% target. That said, data showed that inflation has begun to trend downwards finally, and traders brace for the Federal Reserve’s meeting next week. Speculations had been mounting that the Fed might raise rates by 25 bps, which would mark the end of 50-plus bps rate increases to the Federal Funds rate (FFR).

US consumers estimate inflation would ease below 4%

Later, the University of Michigan (UoM) Consumer Sentiment on its Final reading exceeded estimates of 64.6 and rose by 64.9. The survey conducted by the University of Michigan updated inflation expectations, with a one-year horizon estimated at 3.9%, while for a 5-year rose to 2.9% compared to the preliminary 3.0%,

Gold pressured by high US Treasury bond yields

Meanwhile, US Treasury bond yields continue to be headwinds for Gold. The US 10-year Treasury bond yield continues to edge higher, almost four bps, and yields 3.540%, underpinning the greenback. The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six peers, advanced 0.22%, and reclaimed the 102.000 mark at 102.051.

Gold Technical Analysis

Even though the XAU/USD remains slightly positive in the week, a doji emerging after a two-and-a-half-month rally from $1,616.71 to $1,949.16 suggests it could end. As XAU/USD drops below Thursday’s close, it has opened the door for further downside, but a daily close below the weekly low reached on Monday at $1,911.49 is needed to pave the way for a dip to $1,900. If that scenario plays out, the next support area would be the confluence of the January 18 low and the 20-day Exponential Moving Average (EMA) at around $1,896/97. Conversely, XAU/USD’s reclaiming $1,930 would keep Gold sideways.