Gold prices stabilized around $4,185 on Wednesday after facing significant selling pressure in the previous session.
On the daily chart, the price dipped to around $4,110 before rebounding; however, the recovery has not yet been strong enough to alter the short-term structure.
PCE in Market Focus
From a fundamental perspective, market attention has shifted to the US Personal Consumption Expenditures (PCE) data for August, due for release tonight. This data is crucial as it serves as a key inflation gauge monitored by the Federal Reserve to determine the direction of interest rates.
For year-on-year Core PCE, the market expects the reading to rise to 3.4% from the previous 3.3%. On a monthly basis, Core PCE is projected to increase by 0.3%, up from the prior 0.2%.
If inflation readings exceed expectations, pressure on gold could intensify, as the market might anticipate US interest rates remaining elevated for longer.
Conversely, lower-than-expected readings could alleviate pressure on the dollar and bond yields, thereby allowing gold room to continue its recovery. Reuters also views the PCE data as a primary catalyst for determining gold's next move.
Meanwhile, US Treasury yields remain high. The 10-year bond yield has reached approximately 5.29%, while the 30-year yield stands around 5.62%, capping gold's upside potential even as oil prices begin to ease.
Technically, the daily chart indicates that the XAU/USD structure remains bearish after the price failed to hold the $4,400 level and subsequently fell to around $4,110. A series of lower highs and lower lows since the peak near $4,680 remains evident on the chart. However, the price is currently attempting a rebound after holding the $4,100–$4,120 zone. The $4,200 level serves as the immediate and crucial resistance for determining whether the recovery can continue.
If the price successfully breaks and sustains itself above $4,200, the next potential upside target lies around $4,280–$4,300, ahead of the $4,400 zone.
Conversely, if the price fails to clear $4,200 and faces renewed downward pressure, $4,100 becomes the key support level. A decisive break below this area could pave the way for a test of the $4,000 mark.
With the PCE data acting as the primary catalyst tonight, $4,100 and $4,200 stand out as the two most critical technical levels to watch. For now, the market structure remains bearish-to-neutral until XAU/USD manages to reclaim the $4,200 level.
