**Gold Price Forecast: Gold Retreats After FOMC Comments, US PCE and Labor Data in Focus**
*Original article by FXStreet Team. Adapted and expanded version for improved clarity and completeness.*
Gold prices retreated on Thursday, trimming earlier gains after investors digested comments from the Federal Open Market Committee (FOMC) and shifting expectations ahead of upcoming U.S. data releases. The precious metal had previously shown positive momentum, but a stronger dollar and rising Treasury yields have placed fresh downward pressure on the commodity.
As market participants await key economic indicators, particularly the U.S. Personal Consumption Expenditures (PCE) price index and labor market data, gold is entering a critical phase. This article dives into the forces currently influencing the gold market, recent technical trends, the role of central bank policy, and what could come next.
## Key Takeaways
– Gold eased after FOMC policymakers issued cautiously hawkish comments.
– U.S. Treasury yields have rebounded, undercutting the appeal of non-yielding assets like gold.
– All eyes are on upcoming U.S. Core PCE data, which will shape expectations for future Federal Reserve interest rate decisions.
– Technical analysis reveals strong support and resistance zones for XAU/USD.
– Persistent inflation and labor market strength may keep interest rates elevated, dampening gold’s upside potential.
## Gold Price Performance and Market Sentiment
Spot gold (XAU/USD) fell during the U.S. session on Thursday after giving up intraday gains. The retreat followed comments from Federal Reserve officials which leaned towards further tightening of monetary policy if inflation does not show sufficient signs of easing. While there was no direct indication of an imminent rate hike, the overall message was that the Federal Reserve remains data-dependent and committed to its 2% inflation target.
This cautious stance from the Fed led to:
– A mild uptick in the U.S. Dollar Index (DXY), which often moves inversely to gold.
– A rebound in U.S. Treasury yields, particularly the 10-year yield, which touched a weekly high.
– Diminishing investor appetite for gold, considered a non-yielding safe haven during periods of low interest rates.
Although the yellow metal initially received some support from geopolitical risks and concerns about global economic growth, these factors were overshadowed by renewed strength in the U.S. economy.
## FOMC Outlook and Implications for Gold
FOMC members emphasized their data-driven approach in recent speeches. Key points made by policymakers such as Loretta Mester and Raphael Bostic included:
– Inflation, although lower than its peak, is not yet at the Fed’s target level.
– They remain open to more rate hikes if progress stalls.
– Monetary policy may remain restrictive for a longer period than previously expected.
These statements sparked a reassessment in financial markets, with odds of a rate cut being pushed further into the future. Since gold does not pay interest or dividends, it tends to fall out of favor in a high-rate environment where yields on Treasury bonds offer attractive returns.
## Upcoming US Economic Data
The next significant catalysts for gold prices include Friday’s release of the U.S. Core PCE Price Index, the Federal Reserve’s preferred inflation gauge, alongside personal income and spending data. Next week, a fresh slate of labor market figures will also be released, including non-farm payrolls and the unemployment rate.
Traders will closely watch the following:
– **Core PCE Price Index**: A higher-than-expected reading would likely support further Fed hawkishness, pushing gold lower.
– **Personal Income and Spending**: Strong consumer data may reinforce the Fed’s confidence in maintaining elevated interest rates.
– **August Non-Farm Payrolls**: A robust jobs report would confirm the resilience of the labor market, which may limit prospects for a dovish policy pivot.
– **Average Hourly Earnings**: Persistent wage inflation signals demand-side pressure and makes it harder for inflation
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