Gold steadies around $1990s following US data

Gold price makes minor gains as stickier inflation prompts the Federal Reserve to tighten. Gold price registers minimal gains, as traders brace for the weekend, gains 0.16%% after data from the United States (US) showed that inflation remains at high levels, justifying the need for further tightening by the US Federal Reserve. After hitting a daily low of 1976.31, the Gold Index is trading around $1991.00, up 0.20%.

US equities continued to climb. A report by the US Department of Commerce showed inflation in the United States had decelerated, with the Personal Consumption Expenditure (PCE) rate slowing from 5.1% to 4.2% in YoY readings.

The monthly growth rate increased to 0.1%, below the prior month’s 0.3%. Despite this deceleration, the Fed’s preferred gauge for inflation, the core PCE, remained unchanged at 4.6% YoY, suggesting that inflationary pressures remain stickier than estimates. As a result, investors continued to believe that the Fed would raise rates.

Gold prices remained supported by falling US Treasury bond yields. As of writing, the 2-year Treasury bond yield drops 3.5 bps and yields 4.039%, while the 10-year benchmark note rate sits at 3.443% and collapses 8 bps.

In other data, the University of Michigan (UoM) Consumer Sentiment remained unchanged at 63.5, with inflation expectations for 1-year standing at 4.6% and a 5-year horizon at 3%.

During the week, Gold Index faltered to break below/above the $1970-$2010 range, hovering on each side of the 20-day Exponential Moving Average (EMA) at $1989.35. Although the latter was broken four times weekly, the EMA turned flat, suggesting that sideways trading will continue in the XAU/USD.

If the Gold Index reclaims $2000, further upside is expected, and a challenge to March’s 20 high at $2009.75 in on the cards. A breach of it will expose the YTD high at $2048.79. Conversely, the Gold Index first support would be $1970. A decisive break will expose the 50-day EMA at $1953.34.