Gold prices traded around $4,160 per ounce at 9:00 AM Thursday, holding steady since the Asian session open following selling pressure in the previous session.
Gold's movement continues to be influenced by elevated US Treasury bond yields. The 10-year yield stands at approximately 5.298%, while the 30-year yield is around 5.642%. Meanwhile, rising oil prices—following stalled US-Iran negotiations—have further fueled concerns regarding inflationary pressure.
PCE Lower Than Expected
US PCE data released last night revealed lower-than-expected inflationary pressure. The PCE rose 3.4% year-on-year in August, versus the expected 3.7%, while Core PCE rose 3.0%, below the anticipated 3.3%. The monthly Core PCE reading came in at 0.2%, compared to the expected 0.3%.
These readings dampened market expectations for a Federal Reserve rate hike in October. However, inflation remains above the Fed's 2% target, and US consumer spending increased by 0.9% in August, indicating that domestic demand remains robust.
For gold, the softer PCE data should theoretically provide some support to XAU/USD by easing pressure on the US dollar and interest rate expectations. Nevertheless, high bond yields and rising oil prices continue to act as factors limiting gold's upside.
Attention now shifts to the US employment data for September, scheduled for release on Friday. This data will serve as a crucial catalyst following the PCE readings that lowered expectations for an October Fed rate hike.
As long as XAU/USD holds around the $4,150 level, the price retains the potential to retest the $4,200 zone. Conversely, if selling pressure returns and the price breaks below $4,150, the $4,100 area becomes a key level to watch.
For now, gold is still attempting to recover its losses, but its next direction depends largely on the USD, US bond yields, and employment data.
