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Gold rises after the release US PCE inflation data on Friday, despite readings falling in line with estimates.  The steady decline in inflation as well as lower-than-expected Personal Spending increases chance the Fed will cut interest rates.  XAU/USD has broken above a key trendline, further invalidating the bearish H&S topping pattern that had been forming.   Gold (XAU/USD) rises to trade in the $2,330s on Friday after the release of the US Personal Consumption Expenditures (PCE) Price Index for May.  The PCE is the US Federal Reserve’s (Fed) preferred inflation gauge and it showed a cooling down in price rises to 2.6% year-over-year in May from 2.7% previously. The result was in line with expectations. Core PCE also slowed to 2.6% from 2.8% previously as expected. The data indicates inflation is steadily dropping towards the Fed’s 2.0% target.  Personal Spending data rose 0.2% in May when a higher 0.3% had been forecast from 0.1% in April, the data from the US Bureau of Economic Analysis showed. The Fed is in charge of setting interest rates, to which Gold is sensitive given it is a non-interest-bearing asset. The data indicates the Fed will likely cut interest rates sooner than previously thought, which is bullish for Gold price.  Fed speakers sounding more optimistic Commentary from Fed speakers regarding the outlook for interest rates also influences Gold prices. Atlanta Fed President Raphael Bostic said the Fed had started penciling in future rate cuts, which suggests more concrete plans rather than the vague data dependency of previous Fed-speaker comments.  Bostic expected an interest-rate cut in the fourth quarter as likely followed by four quarter-point cuts in 2025, adding that when the Fed starts cutting rates, it will be the “first in a series; that is a reason for the patience.”  Bostic also dismissed concerns flagged regarding the weakening labor…

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Filed under: News - @ June 28, 2024 9:24 pm