Highlights;
-
Gold Prices Surge: Gold reversed losses on Friday, reaching a near two-month high of $3,450, driven by expectations of Fed policy easing and safe-haven demand, despite a stronger US Dollar.
-
PCE Inflation Data: The Core PCE rose 0.3% MoM and 2.9% YoY, while Headline PCE increased 0.2% MoM and remained at 2.6% YoY, aligning with forecasts and indicating controlled inflation.
-
US Dollar and Yields: The US Dollar Index stabilized near 98.00, while Treasury yields held steady, with the 10-year at 4.22%. Geopolitical tensions and Fed independence concerns bolstered gold’s appeal.
-
Technical Outlook: Gold found support above $3,400, testing resistance at $3,423. With the RSI near 70, the bullish trend may continue if support levels hold, making dips attractive buying opportunities.
Here is a rewritten version of the provided content in a cleaner, more organized format:
Gold Price Update and Market Analysis
Key Highlights:
- Gold Reverses Losses: Gold climbed to a 2-month high near $3,450 on Friday, reversing earlier losses.
- Renewed Demand: Despite a stronger US Dollar, bullion gained traction as traders maintained bets on potential Federal Reserve (Fed) easing.
- PCE Data: The US Core PCE rose 0.3% month-over-month (MoM) and 2.9% year-over-year (YoY) in July, while headline PCE increased 0.2% MoM and remained steady at 2.6% YoY.
Detailed Analysis:
Gold (XAU/USD) reversed course on Friday, erasing intraday losses and reaching fresh highs near $3,447, its strongest level since June 16. The rebound followed the release of the US Personal Consumption Expenditures (PCE) inflation report, which largely aligned with expectations. A softer US Dollar (USD) further supported the precious metal, as traders continued to speculate on potential Fed policy easing in September.
At the time of writing, XAU/USD was up approximately 0.85% for the day, recovering sharply from early weakness near $3,404 during the European session. Gold is on track to secure solid monthly gains, driven by safe-haven demand, Fed policy expectations, and ongoing geopolitical and economic uncertainty. Concerns about the Fed’s independence have further boosted gold’s appeal, with short-term corrections likely being seen as opportunities for traders to buy dips within the broader bullish trend.
PCE Data Breakdown:
- Core PCE Price Index: Rose 0.3% MoM in July, matching forecasts and unchanged from June’s pace. On a yearly basis, core inflation edged up to 2.9%, its highest level since February.
- Headline PCE: Increased 0.2% MoM, in line with estimates but slightly below June’s 0.3% gain. The yearly rate held steady at 2.6%.
Market Movers:
- US Dollar Index (DXY): The index, which tracks the Greenback against six major currencies, held firm after a three-day decline, trading near the 98.00 mark.
- US Treasury Yields: Yields stabilized across the curve, with the 10-year Treasury halting a three-day slide and hovering near 4.22%, close to four-month lows. The 30-year yield rebounded, while the 10-year TIPS yield was near 1.81%.
- Geopolitical Tensions: Efforts to negotiate peace in the Russia-Ukraine conflict faltered, with doubts raised over a potential meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy. A deadly Russian missile strike on Kyiv exacerbated tensions.
- Fed Independence Concerns: President Trump’s attempt to remove Fed Governor Lisa Cook escalated into a legal battle, with Cook challenging the move as unlawful.
- Policy Easing Expectations: Fed Governor Christopher Waller reinforced expectations for a 25 basis point (bps) rate cut starting in September, with potential further reductions of 125-150 bps over the next six months.
- US Personal Spending: Personal spending grew 0.5% in July, exceeding expectations, while personal income rose 0.4% MoM, signaling resilient household consumption despite a softer labor market.
Technical Analysis:
Gold trimmed its losses on Friday, finding support above the $3,400 mark. It rebounded toward Thursday’s peak of $3,423, its strongest level in over five weeks. The $3,400 psychological handle now acts as immediate support, with additional downside cushions at the 21-period Exponential Moving Average (EMA) near $3,395 and the 100-period EMA around $3,365.
The Relative Strength Index (RSI) is approaching overbought territory, hovering near 70, but remains firmly in bullish territory, suggesting that buyers may continue to step in as long as the $3,400 support holds.
On the upside, a sustained break above $3,423 could extend the rally toward the $3,450 region. Conversely, a move below $3,400 would risk exposing the $3,380-$3,370 area, where stronger technical support is layered.
Economic Indicator: Core Personal Consumption Expenditures (PCE) Price Index
The Core PCE is the Federal Reserve’s preferred measure of inflation, excluding volatile food and energy components. A high reading is typically bullish for the US Dollar, while a low reading is bearish.
This rewritten version retains all key information while improving clarity, structure, and readability.
