Gold is trading within a narrow range but maintains a firm tone ahead of the release of the key U.S. PCE inflation report
Gold maintains a firm tone, trading near its all-time high on Friday as it awaits the release of the U.S. PCE inflation data later today for fresh cues.
The metal remains well-supported by strong demand—both as a safe haven and through large central bank purchases—along with ongoing geopolitical tensions and solid expectations for the Fed’s first rate cut in September.
Gold has gained around 22% since the beginning of the year and is on track for another monthly gain, continuing its steep rally over the past six months.
The recent triangular consolidation just below the new record high of $2,531 is bullishly aligned, with dips contained by the rising 10-day moving average (DMA) and a series of higher lows, indicating strong buying interest.
The U.S. Federal Reserve’s policy decision will be a key driver for gold in the near term. Markets are fully pricing in a 25 basis point rate cut in September, with growing speculation that the Fed might opt for a more aggressive 50 basis point cut.
Today’s release of the U.S. PCE Index, the Fed’s preferred inflation gauge, is expected to provide more clarity on the size and pace of policy easing. The Core PCE Index, which excludes volatile components, is forecast to remain steady at 0.2% month-on-month, with the annualized figure expected to tick up to 2.7% in July from 2.6% in June.
If the data comes in line with expectations, indicating that U.S. inflation remains under control, it would further support the case for a rate cut. In this scenario, gold prices could rise further, breaking above the current peak of $2,531 and targeting $2,551 and $2,574 (Fibonacci projections).
However, if the PCE data shows a stronger-than-expected rise in inflation, gold could come under fresh pressure. A break below initial support levels at $2,511/00 (10DMA and psychological level) could risk a deeper decline, testing key supports at $2,475/70 (20DMA and August 22 low) and $2,432 (August 15 low).
Traders are also eyeing next week’s key economic data, including the release of the August U.S. labor sector report.
Res: 2531; 2551; 2574; 2600
Sup: 2511; 2500; 2470; 2452
