In Wednesday’s early New York session, the price of gold (XAU/USD) encountered resistance as it attempted to extend its recovery above the $2,320 mark. The precious metal’s near-term appeal has been dampened by diminishing safe-haven demand amidst easing tensions in the Middle East. Additionally, investors are adopting a cautious stance towards bullion ahead of key economic data releases from the United States.
Market participants are closely eyeing the upcoming release of the Q1 Gross Domestic Product (GDP) data and the core Personal Consumption Expenditure Price Index (PCE) for March, scheduled for Thursday and Friday, respectively. These data points are expected to offer insights into the timing of potential interest rate adjustments by the Federal Reserve (Fed).
Of particular interest is the US core PCE Inflation, the Fed’s preferred inflation gauge, which is projected to show steady growth of 0.3% for March. However, annual figures are anticipated to soften to 2.6% from the 2.8% recorded in February. Should the underlying inflation data surpass expectations, the gold price may face significant downward pressure.
Recent indicators of US inflation, including the Consumer Price Index (CPI) and wage growth, have remained elevated in the first quarter. Continued signs of persistent price pressures would support the Fed’s stance of maintaining current interest rate levels for an extended period. Historically, such a scenario tends to favor the US Dollar and bond yields over gold, thereby diminishing the precious metal’s attractiveness to investors.
