Gold Price Forecast: Profit-taking seeps in for XAU/USD ahead of US PCE inflation

Gold retreats from near five-week highs of $3,423 amid pre-US PCE data repositioning.
The US Dollar consolidates the Asian rebound as Fed concerns remain a drag.
Technically, Gold recaptures $3,400 on Thursday’s closing basis, the daily RSI remains bullish.

Dhwani Mehta FXStreet

Gold is pulling back from near five-week highs of $3,423 set on Thursday, snapping a three-day uptrend early Friday. Traders now await the US core Personal Consumption Expenditures (PCE) Price Index for a boost in Gold.

Gold: All eyes on US PCE inflation data

Gold is bearing the brunt of the overnight bounce in the US Dollar (USD) as traders resort to position adjustments ahead of the critical US inflation data.

However, resurfacing concerns over the US Federal Reserve’s independence check the US USD rebound, leaving Gold in an upside consolidative range near five-week highs.

US Vice President JD Vance’s comments in a USA Today interview on Thursday confirmed the end of the Fed’s autonomy, pressuring the Greenback once again.

In another instance about doubts over the Fed’s independence, Fed Governor Lisa Cook filed a lawsuit on Thursday against US President Donald Trump's effort to fire her.

Trump, in his latest tweet, referring to a Bloomberg piece on a third property transaction now being questioned, said: “Pulte ups Cook scrutiny with criminal referral on third mortgage.”

Meanwhile, Fed Governor Christopher Waller’s dovish remarks also continue to undermine the sentiment around the buck.

Waller said that he would support an interest-rate cut in the September meeting and further reductions over the next three to six months to prevent the labor market from collapsing, per Reuters.

Markets maintain their expectations for a September interest rate cut at around 87%, according to the CME Group’s Fed Watch Tool.

Against this background, the Fed’s favorite inflation measure, the core PCE Price Index, will be closely scrutinized for fresh clues on further easing by the Fed beyond the September meeting.

The core PCE inflation is seen steadying at 2.6% year-over-year (YoY) and 0.3% month-over-month (MoM) in July.

Any downside surprise in the core PCE figures could ramp up Fed rate cut bets, boosting the non-yielding Gold at the expense of the USD and vice versa.

Gold price technical analysis: Daily chart

The short-term technical outlook for Gold continues to paint a rosy picture amid a bullish crossover and a 14-day Relative Strength Index (RSI)

The leading indicator is currently flirting with the 60 level.

Meanwhile, the 21-day Simple Moving Average (SMA) closed above the 50-day SMA on Monday, confirming the bullish crossover.

The immediate topside hurdle is seen in the previous day’s high of $3,423, above which the static resistance at around $3,440 will come into play.

Further up, the June 16 high of $3,453 will be put to the test.

On the flip side, the immediate support is located at the previous day’s low of $3,385, below which sellers will attack the 21-day SMA at $3,366,

A sustained break below the latter will expose the 50-day SMA at $3,349.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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