Gold market trends are stable as traders focus on the U.S. personal consumption expenditures (PCE) data. This data provides insights into the Federal Reserve’s future interest rate decisions. As of 11:26 GMT, gold (XAU/USD) is trading at $2334.43, an increase of $6.62 or +0.28%.
Gold Holding Firm Amid Market Uncertainty
Gold market trends remains strong despite market uncertainty, with hedge funds holding their positions since the February-March rally. In May, gold hit an all-time high due to expectations of rate cuts, China’s stimulus measures, and geopolitical tensions. If gold stays above $2,275, it could reach $2,600 by the end of the year due to several supportive factors.
PCE Data and Market Expectations
The U.S. PCE numbers, the Federal Reserve’s preferred inflation measure, are due at 12:30 GMT. A lower PCE reading is key to maintaining hopes for a Fed rate cut, which would support gold prices. The market expects little to no monthly increase in the headline PCE for May, with core PCE showing its lowest annual rise since March 2021. The Dow Jones forecasts for Friday’s PCE are a flat headline reading and a 0.1% rise in core PCE, compared to April’s increases of 0.3% and 0.2%.
Fed Policy and Economic Indicators
Gold rose over 1% in the previous session following a slowdown in U.S. economic activity. However, Fed Governor Michelle Bowman remains cautious, not yet supporting a rate cut due to persistent inflation. Core PCE has risen 14% since March 2021 despite progress in reducing inflation from its mid-2022 peak. Fed officials, including Governor Lisa Cook, emphasize the ongoing challenge of returning inflation to the 2% target. Futures markets predict a likely quarter-percentage-point rate cut in September, with another possible by year-end, contingent on future data.
Market Forecast: Bullish Outlook for Gold
Short-term Forecast
Gold needs to stay above the $2,275 level to avoid forced long-liquidation. Maintaining stability above this level will foster positive sentiment and sustain the metal’s strength.
Long-term Forecast
If supportive factors persist and the Fed moves towards easing, gold is expected to continue its upward momentum. By the end of the year, gold could reach $2,600, driven by sustained demand and favorable economic conditions. To effectively adjust their positions, traders should closely watch economic indicators and signals from the Federal Reserve.
Technical Analysis
Gold prices remain above key support at $2,275, holding firm despite recent fluctuations. The 50-day moving average, currently at $2,337, acts as resistance and could potentially trigger an upward breakout. Maintaining stability above $2,275 is crucial to prevent a long-liquidation phase, with potential upside targets at $2,387.79, $2,450, and beyond. For more updates on gold prices, visit Daily Gold Signal. For daily updates, check Daily Gold Update.
