Gold Prices Recover Ahead of Crucial US Inflation Data Release

Gold prices have been recovering after hitting a seven-week low of $4,110 earlier this week. As of September 30th, gold prices were trading near $4,195.

The market's focus has shifted to the upcoming U.S. August PCE inflation data release on Wednesday at 8:30 a.m. ET. The Federal Reserve's rate-hike path is expected to be influenced by the data.

Markets currently expect both headline and core PCE to rise 0.3% month-over-month in August. If core PCE comes in below expectations, market pricing for subsequent rate hikes could cool further, putting downward pressure on U.S. Treasury yields and the U.S. dollar, while gold prices may extend their recovery.

However, if PCE prints above expectations again, the market could raise the probability of an October rate hike, and gold could retest this week's lows. The RSI indicator is near 41, indicating that gold prices could still decline in the short term.