Gold is heading back toward the fresh 15-week highs of $4,697 in Wednesday’s Asian trades, reversing a brief dip below the $4,650 level. Gold buyers find renewed strength from a broadly subdued US Dollar (USD), as they look to reposition ahead of the US core Personal Consumption Expenditures (PCE) Price Index data for July.
Gold awaits Fed’s preferred inflation gauge
After struggling a bit in Wednesday’s early dealings, Gold is looking to extend its recent uptrend as upbeat market mood undermines the USD’s safe-haven appeal.
Renewed optimism surrounding the reopening of the Strait of Hormuz continues to weigh heavily on Oil prices, easing inflation fears and weighing on US Federal Reserve (Fed) interest rate hike expectations for next month. This narrative keeps the Greenback consolidating the downside.
Further, the US-Canada tit-for-tat tariffs also act as a headwind for the buck, helping traders quickly buy any dip in Gold prices. The Canadian government said in a statement late Tuesday that it will impose duties of 15%, 25% and 50% across 700 products, taking effect from September 8.
Analysts at Commerzbank note that “the rise in the price of gold continued at the start of the new trading week,” with the metal building on last week’s strong performance. Having “already risen by more than 5% last week, the price reached almost USD 4,700 per troy ounce overnight, its highest level in more than three months,” the bank points out. According to Commerzbank, this latest move is consistent with previous episodes of trade friction, as “in previous phases of escalation in the tariff dispute, the price of gold rose significantly, as this could further damage the US Dollar’s reputation as a reserve currency and safe haven.”
The bullion also continues to draw support from the US Treasury’s surprise doubling of the bond-buyback plan and India’s robust physical Gold demand.
According to a latest report released by the World Gold Council (WGC), after two straight weak months, Gold imports rose in July, signalling stronger demand. Gold imports doubled, rising from 20 tonnes in June to an estimated 40-45 tonnes in July.
However, it remains to be seen if Gold sustains its recent upbeat momentum following the release of the Fed’s favorite inflation gauge, the core PCE Price Index, due later this Wednesday.
Annual core PCE inflation is expected to hold steady at 3.2% in July, while the monthly print is forecast at 0.2% in the same period.
Softer-than-expected core PCE inflation readings could push back against Fed rate-hike bets, weighing on the USD and US Treasury bond yields, while boosting non-yielding assets such as Gold.
Conversely, hotter prints could reinforce inflation concerns, led by the Middle East conflict-driven energy shock, and Fed tightening expectations. In this case, the USD could receive a fresh lift, fuelling a corrective move lower in the yellow metal.
That being said, any reaction in Gold to US inflation data could be short-lived as the main market-moving event this week remains Fed Chair Kevin Warsh’s speech on Friday at the annual Jackson Hole Symposium.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,648.57, extending its advance into fresh highs and holding a clear bullish bias. Spot gold is positioned above the 21-day, 50-day, 100-day and 200-day simple moving averages (SMAs), with the latter at $4,522.84, which collectively suggest a well-supported uptrend after the latest breakout. The Relative Strength Index (14) at 71.45 has moved into overbought territory, hinting that upside momentum is strong but also that the rally could be vulnerable to bouts of corrective pressure.
On the downside, initial support emerges at the 200-day SMA near $4,522.84, followed by the 100-day SMA at $4,378.58, with the 21-day SMA at $4,353.66 and the 50-day SMA at $4,193.74 reinforcing the broader bullish structure on deeper pullbacks. With no nearby technical resistance overhead, the metal’s trajectory would likely remain constructive as long as it stays above the $4,522 area, though the overbought RSI warns that traders should be mindful of short-term mean-reversion phases within the prevailing uptrend.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Core Personal Consumption Expenditures – Price Index (YoY)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures.” Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
