Gold prices in red territory ahead of PCE data

Gold CFDs are -0.40% down, trading at $2323.40 and spot gold is -0.45% down, trading at $2323.97 at the time of writing. As traders await additional information and news before taking positions, the gold market is experiencing a muted sentiment. Further hints regarding the direction of US interest rates—which are a major factor driving gold—are anticipated to be provided by the US Personal Consumption Expenditures (PCE) Price Index for May.

Rate Policy Bets

Fed officials still believe the central bank should not lower interest rates before it is certain that inflation will approach 2%, yet they believe there must be balancing of combating inflation, but not at the expense of the employment market.

As opposed to last week, when they were about 50%, the market-based odds of an interest-rate drop at or before the Fed’s September meeting are still quite high at 67%. This would be positive news for gold. Gold is heavily influenced by geopolitical variables because of its safe-haven characteristics.

Geopolitical Factors

There is a chance that France will go to the far right. Additionally, the approaching elections in the UK and France could throw curveballs into the geopolitical arena. In the UK, Labour is predicted to win handily on July 4, but the right-wing Reform Party is gradually catching up to the Conservatives amid fresh allegations of corruption.

Tuesday’s failure of a US-backed plan to end the eight-month conflict in Gaza has raised geopolitical tensions in the Middle East. Fears of a “all-out” conflict with Lebanon persist despite Israeli Prime Minister Benjamin Netanyahu’s limited agreement to a “partial ceasefire” and the Israeli government’s directive to northern Israeli citizens not to return home until the

Technical Outlook

Technically, gold prices failed to follow through on a break above a critical resistance level at the 50-day Simple Moving Average (SMA) and a trendline joining the highs of May 7 and June 20. Although the bearish Head-and-Shoulders (H&S) pattern that had been forming on the daily chart was technically invalidated by the break, the prognosis is still unclear because bulls were unable to maintain the upswing.