Gold recovery stalls at $2,600 ahead of the US inflation reading
Gold (XAU/USD) is trading with a moderate positive tone on Friday following the sharp sell-off earlier this week. However, upside attempts remain limited as investors brace for the release of the US Personal Consumption Expenditures (PCE) Price Index.
On Thursday, an upward revision to the third quarter’s US Gross Domestic Product (GDP), and the lower-than-expected Jobless claims have endorsed the Federal Reserve’s (Fed) hawkish stance for 2025.
This keeps the US Dollar index pinned near two-year highs ahead of the release of the Fed’s favorite inflation gauge. Investors are waiting to see whether the US central bank’s concerns about higher inflation are justified. A strong reading would cast further doubts on the Fed’s easing cycle and increase negative pressure on Gold.
Higher US yields, strong USD keep Gold recovery subdued
- XAU/USD is trading higher for the second consecutive day but lacks upside momentum, with traders reluctant to sell the US Dollar ahead of a key inflation report to be published at 13:30 GMT.
- US Treasury yields are steady above the 4.50% mark after having rallied 40 basis points over the last two weeks. This acts as a headwind for Gold as it is a non-interest-paying asset.
- US PCE inflation is expected to have increased at a steady 0.2% pace in November on month, with the yearly rate accelerating to 2.5% from 2.3% in October.
- The core PCE, considered more relevant for monetary policy purposes, is seen easing to 0.2% from 0.3% on month and accelerating to 2.9% on year from 2.8% in October.
- Data released on Thursday showed that the US economy grew at a 3.1% annualized pace in the third quarter, significantly improving from the already healthy 2.8% advance previously estimated.
- Likewise, weekly Jobless Claims declined to 220K on the week ending December 13 from the previous week's 242K reading, beating expectations of a slower decline to 230K.
FXStreet
