Gold hovers near record highs ahead of US PCE data as geopolitics remain supportive
Spot gold is holding just off record highs this morning around $3,770 after printing an all-time peak near $3,791 on Tuesday. The immediate driver set is intact: more Fed cuts priced, softer growth pulse, and geopolitical hedging, with Friday’s US PCE the next directional catalyst.
Gold (XAU/USD) daily chart
Past performance is not a reliable indicator of future results.
The key focus is that real yields have eased post-Fed, supporting bullion’s non-yielding appeal. Even as Powell seemed unwilling to commit to a set path of rate cuts, the fact remains that further easing is coming, with markets currently pricing in a 92% chance of another 25bps cut at the next meeting on October 29.
Furthermore, the latest flare-up in geopolitical tensions have added a safe-haven premium to an already rates-driven rally, keeping gold pinned near record highs. This shows up as classic risk hedge behaviour: when headlines point to greater conflict probability, marginal buyers rotate into bullion and hold exposure through data prints; when tensions cool, some of that premium bleeds out. So, even as the immediate focus remains on the Fed-easing narrative, the backdrop of heightened geopolitical tensions offers another tailwind.
Looking ahead, a key risk for the upside in gold lies in the US PCE data to be released on Friday. Forecasts are showing a mild increase in the August data but both the headline and core readings should remain below 3%. If they fail to do so, it could spark some selloff in risk appetite as it would indicate that inflation is rising more than policymakers have forecasted, exerting some downward pressure on gold as rate cut odds get trimmed.
From a technical standpoint, the 3,800 level stands out as the next key resistance as the momentum becomes heavily overbought. The bias remains constructive with further upside likely, but some technical correction may be on the cards in the short term. If so, a move below 3,600 would be withing normal range to reset conditions, at which point new buyers are likely to emerge.