- Gold aims to finish the week with decent gains of 0.37%.
- US Core PCE eases from 5.1% YoY, though remains at forty-year highs; will the Fed pause?
- Gold Price Analysis (XAU/USD): If Gold bulls reclaim $1870, a push towards $1900 is on the cards.
Gold spot (XAU/USD) climbs during the New York session but is still unable to challenge the weekly highs and remains glued to the 20-day moving average (DMA) near the $1848.48 area. At the time of writing, XAU/USD is trading at $1852.28 a troy ounce.
US Core PCE came aligned with expectations but lower than March’s reading
European and US equities continued rising amidst an upbeat market mood. The US Commerce Department released the Core Personal Consumption Expenditure (PCE), the Fed’s favorite inflation reading. Numbers came better than expected, showing that prices are still elevated having risen 4.9% in May (annualized) but off the 5.1% rate printed in April.
Now that inflation appears to be easing from forty-years highs, will the Fed tighten conditions at a slower pace? Meanwhile, the Fed’s May minutes showed that all its members agreed to hike rates by 50 bps in each of the two-consecutive monetary policy meetings.
In the meantime, the US Dollar Index, a measure of the buck’s value vs. its peers, pares some early-day losses and is gaining some 0.07%, sitting at 101.827. Failure to reclaim above 102.500 would open the door for a re-test of the April 24 low at 99.818.
Contrarily to the USD gains, US Treasury yields showed that investors are scaling back from overpricing the US central bank rate hikes expectations. The US 10-year Treasury yield is almost flat in the day, posting minimal losses, down at 2.743%, a tailwind for the non-yielding metal, which benefits from lower yields.
Elsewhere, the US economic docket revealed additional data. Consumer spending rose 0.9% last month and beat estimations as consumers boosted purchases of goods and services, a sign that could underpin US economic growth in the Q2 amid increasing worries of a recession.
Gold Price Analysis (XAU/USD): Technical outlook
On Friday’s price action, Gold has reclaimed the 20-day moving average (DMA) at $1848.42, sitting above the $1850 mark. It’s worth noting that XAU/USD bears could not push prices below the 200-DMA, signaling that selling pressure might be easing, as shown by oscillators. The Relative Strenght Index (RSI) at 45.56 begins to aim higher. Even though it remains in bearish territory, an upslope keeps Gold bulls hopeful of lifting prices towards $1900.
That said, the XAU/USD first resistance would be $1869.61. Break above would send the spot towards the confluence of the Bollinger’s band top band and the March lows at around the $1889.91-1891.08 area. Once cleared, the next stop would be $1900.