Gold Price Forecast: XAU/USD recovers some ground above $1,920, investors await US GDP, PCE

Gold price recovers its recent losses near $1,924 during the early Asian trading hours on Monday. Meanwhile, the US Dollar Index (DXY), a measure of the value of USD relative to a basket of foreign currencies, recorded its tenth consecutive weekly gain and hovers around 105.55. A decline of US T-bond yields drive the precious metal with 10-year benchmark note coupon reversed from a 16-year high of 4.51% towards 4.435%

The Purchasing Managers Index report on Friday raised worries about the trajectory of demand conditions in the US economy following interest rate hikes cycle and elevated inflation. The US S&P Global Manufacturing PMI rose to 48.9 in September from 47.9 in August, indicating an ongoing contraction in the manufacturing sector's business activity. The Services PMI dropped to 50.2 from 50.5 in the previous month, while the Composite PMI declined to 50.1, down marginally from 50.2 in August.

During the FOMC meeting, interest rates remained steady at the 5.25% to 5.50% range. In terms of macroeconomic predictions, most members still expect further rate rises later this year. Susan Collins and Mary Daly, presidents of the Federal Reserve Banks of Boston and San Francisco, emphasized that although inflation is cooling down, additional rate hikes would be necessary. It’s worth noting that rising interest rates raise the opportunity cost of investing in non-yielding assets, implying a negative outlook for XAU/USD.

Moving on, gold traders will focus on the US Gross Domestic Product (GDP) Annualized for the second quarter. The attention will shift to the Core Personal Consumption Expenditure (PCE) Price Index, the Fed's preferred measure of consumer inflation. The annual figure is expected to drop from 4.2% to 3.9%. These figures could provide a clear direction for gold price.