Gold Capped by Strong US Dollar and Elevated Yields
The US Dollar (USD) and elevated bond yields continue to cap any meaningful upside for gold, despite some dip-buyers stepping in near $4,139. The resilient greenback has been bolstered by dovish comments from New York Federal Reserve President John Williams and tempered bets on an October rate hike.
Wednesday's Personal Consumption Expenditures (PCE) Price Index rose 3.4% YoY in August, unchanged from the previous month's downwardly revised reading and missed estimates of a 3.7% print. This mixed signal for policymakers has maintained pressure on gold.
Societe Generale's Jan Groen notes that inflation revisions were modestly favorable, but growth revisions were more important. He argues that 'the economy entered 2H26 with stronger momentum than previously thought, while underlying inflation remains too elevated to provide the Fed with clear comfort.' As a result, an October hike remains on the table pending September CPI and PPI data.
The US-Iran standoff has also lifted the safe-haven Greenback to a fresh high since July 28, acting as a headwind for gold. Traders now look forward to the US economic docket, including the Weekly Initial Jobless Claims and ISM Manufacturing PMI.