The gold price has been trading in a range between $2,020 and $2,040, but with a bullish tilt, as highs have been getting higher. Today XAU broke the range as Gold surged more than $20 higher, following the US PCE core inflation report, which ticked down to 2.8% in January.

FED Rate Cut Odds Increase After the PCE Inflation

The latest data from the Personal Consumption Expenditure series, a key metric closely monitored by the Federal Reserve, came in line with expectations. Both the headline and core price indices showed a slight slowing in inflation compared to the previous month. While this may keep the possibility of rate cuts alive, it’s unlikely to prompt immediate action. However, the monthly increase in both overall and core prices remains a concern, particularly the 0.4% uptick in core inflation.

XAU/USD saw a sharp jump during the early US session following the release of the US core Personal Consumption Expenditure Price Index (PCE) for January, which ticked down. The lackluster inflation data is anticipated to increase the likelihood of Federal Reserve (Fed) rate cuts at the June monetary policy meeting, which sent the USD lower initially, but it later recovered and ended up against all major currencies. GOLD on the other hand, is holding on to the gains.

Gold H1 Chart – The Range Has Been Broken

As a result, gold surged, nearing the $2,050 mark in response to the weaker inflation figures. However, for buyers to gain confidence and invalidate the bearish setup, they would need to see a strong breakout above the trendline and push the price beyond the $2,080 barrier, thereby strengthening bullish sentiments in the market.

On the H1 chat, we see that Gold was being supported by moving averages, particularly the 200 SMA (purple) in recent days. Today the price bounced off that moving average after a pin candlestick and after reaching $2,050, Gold formed a couple of dojis at the top, signaling a reversal down. We decided to open a sell Gold signal, but Gold is protecting gains better than currencies, which have lost against the USD now.

Gold XAU Live Chart