GOLD Surges Following Lower-than-Expected US Core PCE Data
Updated
Gold experienced a significant boost on Friday after the release of marginally lower-than-expected US core Personal Consumption Expenditures (PCE) data, which is the Federal Reserve's (Fed) preferred gauge of inflation. The core PCE for April was reported at 0.2% month-over-month, below the forecasted 0.3%. This data initially propelled gold to a peak of $2,359, but the gains were short-lived as prices quickly corrected.
Market Dynamics and Technical Analysis
The price has now returned to our area of attention, demonstrating a bullish divergence on the Stochastic RSI indicator as the new week begins, suggesting a bullish bias. Additionally, the daily footprint chart reveals a spike of rejection from a passive order block by buyers, reinforcing the potential for a bullish movement.
Impact of Inflation Data on Fed Expectations
The slightly lower inflation data has shifted market expectations regarding the timing of the Fed's interest rate cuts. The probability of a rate cut in September has increased to 55% from approximately 50% previously. This development is generally positive for gold, as it tends to appreciate when interest rates fall due to its non-yielding nature.
Investor Sentiment
Despite this, gold investors remain cautious given the persistent high inflation and the Fed's uncertain policy direction. The ongoing ambiguity surrounding the Fed's future actions continues to influence market sentiment.
Outlook
We anticipate a potential appreciation in gold value today, supported by the recent data and technical indicators. Investors should keep an eye on further developments in inflation data and Fed communications to gauge the longer-term trajectory for gold.
Market Dynamics and Technical Analysis
The price has now returned to our area of attention, demonstrating a bullish divergence on the Stochastic RSI indicator as the new week begins, suggesting a bullish bias. Additionally, the daily footprint chart reveals a spike of rejection from a passive order block by buyers, reinforcing the potential for a bullish movement.
Impact of Inflation Data on Fed Expectations
The slightly lower inflation data has shifted market expectations regarding the timing of the Fed's interest rate cuts. The probability of a rate cut in September has increased to 55% from approximately 50% previously. This development is generally positive for gold, as it tends to appreciate when interest rates fall due to its non-yielding nature.
Investor Sentiment
Despite this, gold investors remain cautious given the persistent high inflation and the Fed's uncertain policy direction. The ongoing ambiguity surrounding the Fed's future actions continues to influence market sentiment.
Outlook
We anticipate a potential appreciation in gold value today, supported by the recent data and technical indicators. Investors should keep an eye on further developments in inflation data and Fed communications to gauge the longer-term trajectory for gold.
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