Gold Pulls Back From Three-Month High Amid US Inflation Data

Gold prices retreated from their three-month high of $4,600 per ounce after the release of the US Personal Consumption Expenditures (PCE) price index data on Friday. The PCE index, closely watched by the Federal Reserve for monetary policy decisions, showed a modest increase that matched economists' forecasts.

The core PCE price index rose 0.2% month-over-month, keeping the annual rate at 2.7%. This suggests inflation is cooling gradually but not rapidly enough to prompt an immediate rate cut. As a result, gold's pullback appears to be a consolidation after a strong run rather than a reversal of its broader uptrend.

The PCE index's impact on gold prices is due to its influence on interest rates and inflation expectations. Higher inflation may prompt the Fed to raise rates, strengthening the dollar and pressuring gold. Lower inflation could lead to rate cuts, which typically support gold prices.