Middle East tensions, US core PCE keep gold price stable

Gold price continued to consolidate after the US core PCE inflation reading remained in line with estimates. The downside in the gold price remains cushioned by escalating tensions in the Middle East.

US Yellen sees Treasury yields elevated on Fed’s “higher for longer” interest rates outlook. Gold price trades back and forth below $1,990 as the downside is cushioned by escalating Middle East tensions while the upside is limited by more upbeat US economic data, namely robust Q3 Gross Domestic Product (GDP) and Durable Goods Orders. Gold is trading at $1,980.73 at the time of writing

The precious metal failed to deliver a decisive action despite the release of the sticky Core Personal Consumption Expenditure (PCE) inflation data.

The US Bureau of Economic Analysis (BEA) reported that Monthly core PCE inflation grew by 0.3% in September as expected by the market participants against the 0.1% growth recorded in August. On an annual basis, core PCE inflation rose by 3.7% as forecasted but remained lower than the 3.9% increase in August.

A sticky Fed’s preferred inflation gauge seems insufficient to dent expectations of a steady interest rate decision from the Federal Reserve (Fed)in its upcoming monetary policy meeting, scheduled for November 1 as US long-term bond yields are significantly higher.

The US Dollar and long-term bond yields recovered sharply after blockbuster GDP numbers as the data shows resilience in the US economy. The phenomenal GDP growth aligns with the “soft landing” scenario envisaged by the Fed in its battle against stubborn inflation. Still, the upside in the Gold price could remain restricted as US Treasury yields may remain elevated for a long amid the Fed’s “higher for longer interest rates” plot.