Gold Prices Await the Fed’s Preferred Inflation Gauge

Gold Prices Await the Fed’s Preferred Inflation Gauge

Markets are focused on the upcoming release of the U.S. Personal Consumption Expenditures Index for July, the Federal Reserve’s preferred inflation measure on Friday. Forecasts point to a steady monthly gain of 0.3%, with annual readings expected at 2.6% for the headline index and 2.8% for the core (excluding food and energy).

The impact of recently imposed Trump administration tariffs, effective in early August, is unlikely to appear in this week’s data. Instead, signs of tariff effects should begin to emerge in reports from September onward. Durable goods such as autos, electronics, and appliances are expected to face softer demand due to higher prices, while non-durable items like clothing and footwear may also see consumer pullback. Essential goods such as food and medicine, however, are likely to remain resilient. The services sector may face mild pressure from higher goods prices but is expected to maintain its role as a key driver of U.S. growth.

Fed and Market Focus

The Fed and financial markets will place greater emphasis on core inflation rather than headline figures, as core strips out volatile categories like food and energy. Stronger core readings would suggest underlying consumer demand remains intact, potentially keeping the Fed on course for only two rate cuts this year. Conversely, if core inflation weakens, it would strengthen the case for additional monetary policy easing, particularly against the backdrop of a cooling labor market and political pressure from the White House.

Technical Outlook 

Gold has traded sideways since early July, forming lower highs and higher lows. Last Friday’s close above the 50-day moving average signals potential for an upside move toward the high end of current trading zone located between $3,357–$3,500. A daily close above $3,500 would trigger a bullish momentum possibly towards $3600. That said, the psychological resistance level at $3,550 should be considered in this case.

 Key levels to consider in the Bearish Scenario

On the downside, a daily close below $3,357 opens the door for the price to retreat towards $3,245 However, the support level at 3268 should be monitored. A daily close below $3,245 would hand control to sellers, potentially sending the price toward $3,127. In this scenario, the support level at $3,167 should be kept in focus.

Gold – Daily Price Chart

Chart Source: ADSS Platform