Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price (XAU/USD) edges higher during the Asian session on Friday, albeit lacks follow-through buying and remains below the overnight swing high. As investors look past the weaker US GDP print, growing acceptance that the Federal Reserve (Fed) will delay cutting interest rates amid still sticky inflation helps revive the US Dollar (USD) demand. This, along with a generally positive tone around the equity markets, turns out to be a key factor acting as a headwind for the safe-haven precious metal.
The downside for the Gold price, however, remains cushioned as the USD bulls might prefer to wait for more cues about the Fed's rate-cut path before placing fresh bets. Hence, the focus remains glued to the release of the US Personal Consumption Expenditures (PCE) Price Index. The crucial inflation data will play a key role in influencing the Fed's future policy decision, which, in turn, will drive the USD demand and determine the next leg of a directional move for the non-yielding yellow metal.
Daily Digest Market Movers: Gold price bulls seem non-committed ahead of the crucial US inflation data
The US GDP report released on Thursday showed a sharp deceleration in economic growth and stubborn inflation, which, in turn, is seen as a key factor lending support to the Gold price.
According to the data published by the US Commerce Department, the world’s largest economy grew by 1.6% at an annualized rate in the first quarter, marking the weakest reading since mid-2022.
Additional details of the report revealed that underlying inflation rose more than expected, by 3.7%, in the first quarter, reaffirming bets that the Federal Reserve will keep rates higher for longer.
The yield on the benchmark 10-year US government bond shot to the highest level in more than five months in reaction to the mixed data and acts as a headwind for the non-yielding yellow metal.
This, along with easing fears about a further escalation of geopolitical tensions in the Middle East, undermines the safe-haven precious metal and should contribute to capping the upside.
The US Dollar bulls, meanwhile, prefer to wait for more cues about the Fed’s rate cut path, putting the focus squarely on the release of the Personal Consumption Expenditures (PCE) Price Index.
The crucial inflation data will play a key role in influencing the Fed’s future policy decisions and driving the USD demand, which should help in determining the near-term trajectory for the commodity.
Technical Analysis: Gold price could appreciate further once 100-period SMA on the 4-hour chart is taken out
From a technical perspective, the XAU/USD, so far, has been struggling to make it through the 100-period Simple Moving Average (SMA) on the daily chart. The said barrier is currently pegged near the $2,345 region and should now act as a key pivotal point amid mixed oscillators on the daily chart. Meanwhile, a sustained strength beyond will be seen as a fresh trigger for bullish traders and lift the Gold price to the next relevant hurdle near the $2,371-2,372 region. The subsequent move up could extend further towards the $2,400 round figure en route to the all-time peak, around the $2,431-2,432 area touched earlier this month.
On the flip side, bearish traders are likely to wait for some follow-through selling and acceptance below the $2,300 mark before placing fresh bets. The Gold price might then extend the corrective decline further towards the $2,260-2,255 intermediate support before eventually dropping to the $2,225 area and the $2,200-2,190 region, representing the 50-day Simple Moving Average (SMA).
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