Gold consolidated further as the US core PCE inflation figure remained in line with expectations.
The gold price (XAUUSD) oscillates below $1,990, with the downside cushioned by growing Middle East tensions. And the upside constrained by more bullish US economic data. Especially solid Q3 GDP and Durable Goods Orders. Despite the announcement of the sticky Core Personal Consumption Expenditure (PCE) inflation figures. The precious metal failed to deliver a significant action.
The US Bureau of Economic Analysis The Bureau of Economic Analysis (BEA) revealed. That monthly core PCE inflation increased by 0.3% in September. As expected by market participants, following a 0.1% increase in August. Core PCE inflation rose 3.7% year on year, as expected, but remained lower than the 3.9% increase in August.
A sticky situation As US long-term bond yields are much higher, the Fed’s preferred inflation measure appears insufficient to dent expectations of a stable interest rate decision from the Fed (Fed) at its upcoming monetary policy meeting on November 1.
Yellen predicts higher Treasury yields as a result of the Fed’s “higher for longer” interest rate stance.
The US dollar and long-term bond yields rebounded dramatically following the release of record GDP figures. Demonstrating the resiliency of the US economy. The exceptional GDP growth corresponds to the “soft landing” scenario. Intended by the Fed in its war against inflation. combat stubborn inflation. However, the upside in the gold price may be limited. As US Treasury yields may remain lofty for a long time due to the Fed’s “higher for longer interest rates” projection.
Daily Market Movers: Gold price fluctuates as attention switches to Fed policies.
The gold price is consolidating around $1,990.00 as tensions between Israel and Palestine continue to provide support.
The Israeli army briefly entered Gaza to conduct a ground attack. Furthermore, a senior Hamas official has asked friends to intervene in the ongoing battle. In order to save Gaza against a full-scale Israeli assault.
As long as Western nations support Israel, the risks of Iran-backed Hezbollah intervening in the Israel-Palestine conflict remain.
On Thursday, the gold market encountered selling pressure near $1,990.00 on positive US data. The US BEA reported that the US economy grew at a faster pace of 4.9% in the July-September quarter on an annualized basis, exceeding expectations of 4.2% growth and more than doubling the 2.1% rate seen in the second quarter. US economic strength in the third quarter was driven by robust consumer spending amid a tight labor market, rising residential investment, and high government spending. and achieving efficiency to meet the needs of homes.
US Durable Goods Orders data for September, also released on Thursday, indicated that the US manufacturing sector will see dramatically increased demand in the coming months.
Durable goods orders increased 4.7%, above expectations of 1.5%. Orders fell slightly by 0.1% in August.
Following the announcement of the GDP figures, US Treasury Secretary Janet Yellen told Bloomberg that while good GDP numbers point to a “soft landing,” they will also keep bond yields elevated.
According to Janet Yellen, high US bond yields reflect great confidence in the US economy and suggest that interest rates will remain higher for a longer period of time.
The US Dollar Index (DXY) appears to be on track for a positive weekly close, although edges down on Friday from a two-week high of 106.90.
