Gold Price Holds Modest Gains as Bulls Cautiously Await US PCE Data

Gold prices are holding modest intraday gains as market participants remain cautious ahead of the upcoming US Personal Consumption Expenditures (PCE) data. Investors are closely monitoring the release, as it could provide insights into inflation trends and influence future Federal Reserve decisions. Bulls appear hesitant, waiting for clearer signals before committing to further movements in the gold market.

Gold prices continue to build on gains for the second consecutive day, driven by concerns over trade wars and geopolitical risks. The subdued USD and ongoing global tensions, including the Russia-Ukraine conflict and potential tariffs from US President-elect Donald Trump, are boosting demand for safe-haven assets like gold (XAU/USD).

The USD’s limited movement and geopolitical tensions push gold to a two-day peak near $2,645 ahead of the European session. However, a risk-on market sentiment, expectations of slower interest rate cuts by the Federal Reserve, and rising US Treasury bond yields are limiting further gains for gold. Traders are now focusing on key US inflation data, including the Q3 GDP report and the PCE Price Index, for additional market direction.

Trade concerns, such as Trump’s promise to impose tariffs on imports from Canada, Mexico, and China, have contributed to the continued flow of safe-haven investment into gold. Meanwhile, the Russia-Ukraine conflict continues to escalate, with reports of heavy Russian drone attacks in Ukraine and the use of hypersonic missiles, raising concerns about further instability. In contrast, the Middle East conflict has eased slightly after a ceasefire agreement between Lebanon and Israel.

On the economic front, US Consumer Confidence reached its highest level since July 2023, while minutes from the November FOMC meeting revealed a divided Federal Reserve on the future of interest rate cuts. Despite mixed opinions within the Fed, investors still expect a 63% chance of a 25-basis-point rate cut in December. Trump's Treasury Secretary nominee, Scott Bessent, is expected to take a more gradual approach to tariffs to address the US budget deficit.

With the US dollar holding near weekly lows and US government bond yields steady, gold prices remain supported. The upcoming US GDP and PCE data releases will likely provide further clues about the economy's direction, influencing gold price movements.

From a technical perspective, gold’s recent rebound from a key Fibonacci level has favored bullish traders. However, resistance near the 100-period Simple Moving Average (SMA) on the 4-hour chart, around the $2,645 region, poses a challenge. A break above this level could drive gold towards $2,665 and eventually $2,677-$2,678. Conversely, support near $2,624-$2,622 could hold, with a break below $2,600 signaling a bearish shift and exposing further downside towards $2,537.

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Source: fxstreet‍