GOLD:Bears in command, all eyes on US PCE inflation.

24 Feb 2023

The price of gold continues to gradually decrease on Friday, despite a decline in 10-year US Treasury bond yields below 3.9% on Thursday. This has failed to trigger any gains for the bright metal, despite some slight downside limitation. The US Dollar remains strong in most of the market, which has contributed to the continued decline of gold prices. However, positive weekly Jobless Claims data has improved the market mood as the US labor market appears to be stable. Currently, gold prices are near year-to-date lows at around $1,820, which is serving as support.

The market is now eagerly awaiting the release of the US Personal Consumption Expenditures (PCE) Price Index, which is the Federal Reserve's preferred measure of inflation, scheduled for 13:30 GMT. Gold traders and investors will be watching the release closely, as Core PCE inflation is expected to rise by 0.4% on a monthly basis, but the annual figure is expected to decline to 4.1% in January from 4.4% in December. The reaction of the market should be clear, with lower-than-expected monthly PCE inflation weighing on the US Dollar and the opposite effect on the price of gold. Although the CPI report in January revealed that inflation remained sticky, it would be surprising to see this data have a long-lasting impact on markets.