Gold prices are currently easing after reaching a more than three-month high in the previous session, trading around $4,620 to $4,642 per ounce. This follows a significant rally in August, with bullion gaining roughly 15%, driven by a weaker dollar, increased demand for hard assets, and the US Treasury's announcement to expand purchases of longer-dated debt. US gold futures also saw a slight increase, reaching $4,700.70.
Investors are closely monitoring upcoming economic data, particularly the US Personal Consumption Expenditures (PCE) price index for July, which is the Federal Reserve's preferred inflation gauge. The report, released on Wednesday, indicated that the PCE Price Index rose 3.7% year-over-year, slightly above the 3.6% expected, while the core PCE Price Index matched expectations at 3.3%. This slightly stronger-than-expected headline figure initially added some downward pressure on gold, as persistent inflation could support higher US interest rates. However, the report did not significantly alter market expectations for the Fed's September meeting.
Market attention will now turn to Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole Economic Policy Symposium on Friday. Investors will scrutinize his comments for fresh signals on the Fed's policy outlook. A softer-than-expected inflation report combined with a dovish message from Warsh would be the most supportive outcome for gold, reinforcing expectations for lower real yields and reducing the opportunity cost of holding the non-yielding asset. Conversely, a hotter inflation print could revive the opposite trade. According to the CME FedWatch Tool, markets are pricing in around a 62-64% chance that the Fed will leave rates unchanged in September, with a 36-38% chance of a rate hike.
Technical analysis suggests that spot gold may retest resistance at $4,681, with a sustained break potentially leading to gains in the range of $4,707 to $4,743. On the downside, initial support is seen around $4,607 to $4,606, with deeper support near $4,502. Wells Fargo Investment Institute maintains a 2026 target for gold between $4,900 and $5,100, though they anticipate an uneven path higher due to potential monetary policy headwinds. Demand for gold remains elevated due to resilient global demand, renewed central bank purchases, and geopolitical uncertainty.
