Gold Prices Rally Ahead of US PCE Data

Gold Higher on Softer USDGold prices are rising sharply ahead of the next round of key US data today. On the back of weaker-than-forecast JOLTS job opening, consumer confidence, services and manufacturing PMIs and now also ADP employment and prelim Q2 GDP, it’s safe to say that the market has firmly reigned in its September Fed rate hike expectations. A slew of weaker-than-forecast US data has poured cold water on the argument that US economic strength requires further tightening near-term. Indeed, while the US might well avoid recession (as per the Fed’s own forecast), slowing economic activity is turning attention more towards projected rate cuts across H1 2024.PCE Data Up NextLooking ahead today, focus will be on the latest US PCE data with both core and headline due. Both readings are expected to have ticked up slightly on the prior month which, if seen, will likely lead to muted USD action ahead of the NFP tomorrow. However, if we see any further data weakness today, this should send USD lower into tomorrow’s data, keeping gold prices supported near-term. Looking ahead tomorrow, the best outcome for gold bulls will be a set of weaker figures which would keep USD pressured into next week, effectively ruling out a further hike from the Fed next month.Technical ViewsGoldThe rally off the August lows has seen the market trading sharply higher. Price is now testing the bear channel top and the underside of the broken bull trend line. This is a key area of technical confluence for the market which bulls will need to see broken or risk a fresh downturn. Above here, 1973.51 is the next level to watch.