The price of gold continues to maintain its firm tone, holding near a new all-time high as investors await the release of US PCE data. This data is expected to provide fresh signals that will impact the market’s direction. Gold has been well supported by strong demand, acting as a safe haven asset and experiencing large purchases by central banks. These factors, combined with geopolitical tensions and expectations for the Fed’s first rate cut in September, have propelled the yellow metal to gain around 22% since the beginning of the year.
The latest triangular consolidation under the new record high indicates a bullish trend for gold. Dips have been consistently contained by the rising 10DMA, with a series of higher lows pointing to strong bids. The upcoming US Federal Reserve policy decision will serve as a key driver for gold’s near-term performance. Market expectations are fully pricing in a 25 basis points rate cut in September, with growing speculation for a more aggressive 50 basis points cut.
The release of the US PCE Index, the Fed’s preferred inflation gauge, will provide further insight into the market landscape. Forecasts suggest that the Core PCE Index is expected to remain unchanged month on month, with an annualized figure ticking slightly higher. These values indicate that inflation in the US is under control, supporting the case for a rate cut by the central bank. Gold prices may rise further if the PCE data aligns with expectations, but could face pressure if the numbers come in higher than anticipated.
In a bullish scenario, gold prices are expected to rise through the current peak and target higher levels based on Fibonacci projections. Conversely, a stronger than expected rise in inflation could deflate the price of gold, leading to a loss of initial support levels. Key support levels to watch include $2511/00, $2475/70, and $2432.
The market for gold remains dynamic and influenced by a variety of factors including demand, geopolitical tensions, and macroeconomic data. Investors should closely monitor upcoming events such as the US PCE data release and the Fed’s policy decision to gauge the future direction of gold prices.