Gold Loses Momentum as US PCE Data Triggers Stronger Dollar
Gold's recent rally has lost steam as investors turn cautious following strong US Personal Consumption Expenditures (PCE) data. The precious metal had climbed to $4,697 earlier this week, its highest level since May 14, but is now trading around $4,585.
The pause in gold's upward momentum comes as traders lock in profits near recent highs and the US Dollar stages a modest recovery following Wednesday's PCE data. The Federal Reserve may need to keep interest rates higher for longer, reducing the appeal of non-yielding gold.
Despite this, inflation is no longer accelerating sharply, according to recent Consumer Price Index (CPI) and Producer Price Index (PPI) data, which reduces the chances of an immediate Fed rate hike. The US Dollar Index (DXY) trades around 99.25 on Thursday, extending its recovery from last week's losses.
Traders now look ahead to Fed Chair Kevin Warsh's speech at the Jackson Hole Symposium on Friday for greater clarity on the interest rate outlook. Middle East tensions also remain an important factor as elevated energy prices continue to pose upside risks to inflation.