Gold News: PCE Inflation Data Looms Over Gold Market Amid Weekly Losses

Gold Prices Test Resistance Near $2607 With Weekly Loss Pressures

Gold is trading higher on Friday as traders position ahead of the November U.S. Personal Consumption Expenditures (PCE) inflation data. However, prices remain capped by resistance at $2607.35-$2629.13, with further challenges posed by the 50-day moving average near $2669.00. The metal has declined approximately 1.8% this week, weighed down by the Federal Reserve’s hawkish stance on rate cuts.

At 12:56 GMT, XAU/USD is trading $2603.72, up $9.17 or +0.35%.

Federal Reserve’s Rate Outlook Weighs on Gold Sentiment

The Federal Reserve’s projection of only two 25-basis point rate cuts in 2025 has tempered bullish sentiment for gold. This cautious approach contrasts with earlier expectations for more aggressive policy easing. The prospect of prolonged higher rates raises the opportunity cost of holding non-yielding assets such as gold.

Fed Chair Jerome Powell’s comments on the need for cautious policy easing, supported by stronger-than-expected third-quarter U.S. growth data and falling weekly jobless claims, have reinforced this outlook. Traders now face limited optimism for gold in the face of persistent inflation and resilient economic conditions.

Treasury Yields and Dollar Add Headwinds for Gold

Rising U.S. Treasury yields and a stronger dollar have amplified pressure on gold prices. Treasury yields climbed following robust economic data and the Federal Reserve’s policy guidance, attracting investors to interest-yielding assets over gold. Additionally, the dollar’s strength has eroded gold’s appeal as a hedge, particularly for foreign buyers facing higher exchange costs.

The pullback in yields and the dollar ahead of today’s PCE release has provided temporary support for gold, though sustained relief may hinge on weaker-than-expected inflation data.

Downside Risks Remain Pronounced for Gold

Technical signals underline significant downside risks for gold. Key support at $2536.85 is likely to be tested if selling pressure continues. A break below this level could accelerate a decline toward the 200-day moving average at $2472.31. Traders should monitor these levels closely, particularly in the context of today’s inflation report.

PCE Inflation Data in Focus for Year-End Trading Direction

November PCE inflation is forecast to rise 0.2% month-over-month and 2.5% year-over-year. Cooling inflation could offer gold temporary relief by reducing bond yields, but core inflation remains a critical variable. An upside surprise in PCE data would likely renew pressure on gold prices.

Short-Term Market Forecast

Gold prices are expected to trade with a bearish bias in the short term. Resistance at $2629 and $2669 remains formidable, while a test of $2536.85 appears increasingly likely if inflation data or hawkish Fed sentiment persists. U.S. Treasury yields and dollar strength are additional factors to watch as they continue to weigh on gold’s recovery potential.

More Information in our Economic Calendar.