Gold Slightly Bullish As It Awaits the Core PCE Inflation Report

Gold prices rose to new record highs earlier this month, after smashing the previous high at $2,075, but reversed back down pretty fast after reaching $2,040 and fell below $2,000 again. But the FOMC meeting which sounded pretty dovish for the USD gave Gold another boost, sending it surging higher again last week, with moving averages acting as support on the daily chart.

The 50 SMA (yellow) turned into support on the daily chart first and XAU/USD bounced around $75 off that moving average. On Friday we saw another retreat lower following some hawkish remarks by FED members, but the 20 SMA (gray) turned into support this time, so it seems like the larger bullish trend is still on.

On the opening day of a new week, GOLD drew some dip-buying at the 20 daily SMA and reversed some of Friday’s decline. The bullish momentum, however, lacks conviction because traders are waiting for the economic data from the US to come out later in the week. The core PCE Price Index inflation which is the favorite inflation measure for the Federal Reserve (FED) will be released on Friday and will likely have an impact on the FED policy. This, in turn, will help determine the next leg of the non-yielding yellow metal’s directional shift.

However, we are in that time of year when cash flows are quite strong and they even outweigh fundamentals, making it difficult to pinpoint every market move. Yesterday we saw a sudden $15 jump for no particular reason, and flows might be blamed, but all eyes are on the Red Sea and how the US will respond to a threat to world shipping. However, with the Fed being dovish and the USD and us Treasury yields falling, Gold has fundamental supporting it. Although not much action is expected until Friday, so we’ll try to do our best in picking Gold trades.

Gold XAU Live Chart