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Home Gold Prices Gold Rebounds After US PCE Data Misses Expectations

Gold Rebounds After US PCE Data Misses Expectations

by anna

Gold (XAU/USD) recovered to trade in the $2,660s per troy ounce on Friday, following the release of weaker-than-expected US inflation data. The US Core Personal Consumption Expenditures (PCE) index, a key inflation gauge, showed a modest 0.1% increase month-over-month in August, below the 0.2% forecast. This disinflationary trend signals that the Federal Reserve may continue its gradual interest rate cuts, which benefits gold as a non-yielding asset.

Year-over-year, Core PCE rose 2.7%, slightly above July’s 2.6%, while headline PCE grew by 2.2%, down from the prior 2.5%. The lower-than-expected inflation numbers caused a softening in the US dollar, supporting gold’s rebound after earlier losses driven by fading impacts of Chinese government stimulus and more conservative global central bank policies.

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Gold had touched a new record high earlier in the week but stalled as global monetary policymakers, including the Swiss National Bank and Bank of Mexico, implemented only modest rate cuts. Meanwhile, a Reuters poll suggests the Reserve Bank of India will cut rates by a cautious 50 bps over the next six months. Additionally, easing expectations for a 50 bps Fed rate cut in November—down to 50% from over 60%—after stronger-than-expected US economic data, including Jobless Claims and Durable Goods Orders, further influenced gold’s price movement.

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Safe-haven demand for gold has also been affected by geopolitical developments. Despite ongoing tensions in the Middle East, fears of a broader conflict involving Israel and Hezbollah have subsided for now, although heightened tensions in the Red Sea, with Houthi rebels targeting oil tankers, continue to pose risks.

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Looking ahead, if geopolitical tensions flare up—particularly with the possibility of an Israeli ground offensive—investors could turn back to gold for safety, pushing prices higher again.

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