• Gold benefits from a weaker US Dollar, and edges up 0.45%, amid firm US Treasury bond yields.
  • Investors eye the upcoming PCE Price Index, the Fed’s preferred inflation measure, which could impact rate cut expectations.
  • The US Dollar Index (DXY) falls as the CME FedWatch Tool indicates a 66% chance of a rate cut in September, up from 59.5%.

Gold jumped off last Friday’s low and benefitted from a weaker US Dollar on Monday. On Friday, investors are bracing for the release of the Federal Reserve’s preferred gauge for inflation, the Personal Consumption Expenditures (PCE) Price Index. XAU/USD trades at $2,332, up 0.49%, while the Greenback falls amid firm US Treasury bond yields.

Risk appetite deteriorated; investors seeking safety flock to the golden metal. US Treasury bond yields are flat, as depicted by the 10-year Treasury note standing at 4.253% unchanged.

The US Dollar Index (DXY), which tracks the value of American currency against a basket of six other currencies, fell 0.26% to 105.53.

The US economic docket will feature the Fed’s preferred gauge for inflation, the PCE. If the data aligns with the consensus, this will mean that the disinflation process is evolving as Fed policymakers expect and increase the chances for an interest rate cut as soon as September.

According to the CME FedWatch Tool, traders are pricing in a 66% chance of easing in September, up from 59.5%.

In the meantime, San Francisco Fed President Mary Daly said the labor market is ‘nearing” an inflection point, where further weakening will signify higher unemployment. Daly’s comments signal she’s leaning dovish as she added, “At this point, inflation is not the only risk we face.”

The December 2024 federal funds rate futures contract implies the Fed will ease policy by just 36 basis points (bps) toward the end of the year.

Daily digest market movers: Gold price advances on a soft US Dollar

  • Headline PCE is expected to hit 0% in May, lower than April’s 0.3%, and in the twelve months to May, to edge lower from 2.7% to 2.6%.
  • Core PCE is foreseen at 0.1% MoM, down from 0.2%, and on an annual basis, is estimated to dip from 2.8% to 2.6%.
  • Last week’s US economic data was mixed. On the growth side, the economy remains robust via strong S&P Global Flash PMIs and a slowdown in Retail Sales. Nevertheless, it shows some weakness on the labor market side.
  • Fed officials advised patience regarding interest rate cuts, emphasizing that their decisions would remain data dependent. Despite last week's positive CPI report, policymakers reiterated the need to see more data like May's before considering any changes.

Technical analysis: Gold price climbs and test Head-and-Shoulders neckline at around $2,330

Gold price remains downward biased after forming a ‘bearish-engulfing’ chart pattern on Friday. This further validates the Head-and-Shoulders chart pattern, meaning that further downside is expected for the non-yielding metal

The XAU/USD next support would be $2,300. Once cleared, XAU/USD would fall to $2,277, the May 3 low, followed by the March 21 high of $2,222. Further losses lie underneath, with sellers eyeing the Head-and-Shoulders chart pattern objective from $2,170 to $2,160.

Conversely, if Gold reclaims $2,350, that will expose additional key resistance levels like the June 7 cycle high of $2,387, ahead of challenging the $2,400 figure.

Economic Indicator

Personal Consumption Expenditures - Price Index (MoM)

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 MoM figure compares prices in the reference month to the previous month. 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 speaking, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.

Read more.

Next release: Fri Jun 28, 2024 12:30

Frequency: Monthly

Consensus: 0%

Previous: 0.3%

Source: US Bureau of Economic Analysis


Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content

Recommended content

Editors’ Picks

EUR/USD consolidates below 1.0950 ahead of ECB policy announcements

EUR/USD consolidates below 1.0950 ahead of ECB policy announcements

EUR/USD turns sideways below 1.0950 in Thursday’s European session after rallying to a fresh four-month high on Wednesday. The pair trades with caution, as investors shift to the sidelines ahead of the European Central Bank policy meeting, which will be announced at 12:15 GMT.


GBP/USD stays in daily range near 1.3000 after UK jobs data

GBP/USD stays in daily range near 1.3000 after UK jobs data

GBP/USD treads water at around 1.3000 in the European session, holding its retreat from the 2024-high it set at 1.3045 on Wednesday. The UK data showed that the ILO Unemployment Rate held steady at 4.4% in the three months to May, as forecast, failing to trigger a reaction.


Gold price remains stronger due to rising expectations of Fed rate cuts

Gold price remains stronger due to rising expectations of Fed rate cuts

Gold price (XAU/USD) edges higher to near $2,470 per troy ounce on Thursday, remaining close to record highs amid growing optimism that the Federal Reserve (Fed) will reduce rates in September.

Gold News

Worldcoin price sets for a rally following the breakout of the descending trendline

Worldcoin price sets for a rally following the breakout of the descending trendline

Worldcoin price faces a descending trendline on Thursday; a breakout signals a bullish move. On-chain data shows that WLD's daily active addresses are increasing, signaling greater blockchain usage. 

Read more

European Central Bank widely expected to keep interest rates unchanged in July

European Central Bank widely expected to keep interest rates unchanged in July

The European Central Bank is set to leave key rates unchanged after July policy meeting. ECB President Christine Lagarde will be questioned about the possibility of a rate cut in September.

Read more