Gold Price Forecast XAU/USD – Slightly Higher Ahead of Personal Consumption Expenditures (PCE) Data

Gold futures are edging higher on Friday shortly before the release of key U.S. inflation data at 13:30 GMT that could offer some clues to the Federal Reserve rate-hike path. Volume could be on the light-side ahead of the long Christmas holiday weekend. Nonetheless, investors should be prepared for a volatile reaction to the news.

At 10:45 GMT, February Comex gold futures are trading $1805.80, up $10.50 or +0.58%. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $166.76, down $2.04 or -1.21%.

Investors are focusing on the personal consumption expenditures (PCE) data and indications of inflation moderating would give the Fed one reason to put on hold any plans to raise interest rates aggressively at its Jan/Feb meeting.

A final reading of the Fed’s favorite measure of inflation is expected to show price pressures accelerated at a rate of 4.6% in the third quarter, in line with a second reading from late November.

That puts the PCE lower than the second quarter’s 4.7% reading, but it’s still more than twice the central bank’s 2% target.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $1836.90 will signal a resumption of the uptrend. A move through $1752.90 will change the main trend to down.

The minor trend is down. This is controlling the momentum.

The futures contract range is $2090.10 to $1632.40. Its retracement zone is $1861.30 – $1804.30. Gold is currently straddling its Fibonacci level at $1804.30.

On the downside, the nearest support is a pair of 50% levels at $1785.20 to $1771.50. The latter is a potential trigger point for an acceleration to the downside.

Daily Swing Chart Technical Forecast

Trader reaction to $1804.30 is likely to determine the direction of the February Comex gold futures contract on Friday.

Bullish Scenario

A sustained move over $1804.30 will indicate the presence of buyers. If this move creates enough upside momentum then look for the market to possibly creep towards the pair of tops at $1833.80 – $1836.90.

Bearish Scenario

A sustained move under $1804.30 will signal the presence of sellers. This could trigger the start of a labored break with potential downside targets a 50% level at $1785.20, minor bottoms at $1782.00 and $1778.10 and a 50% level at $1771.50. The latter is a potential trigger point for an acceleration to the downside.