Gold dips near $4,000 as US PCE data fuels expectations of a December rate hike
Gold slipped to about $4,015 in early Asian trade after US personal consumption expenditures data reinforced market expectations of a Federal Reserve rate increase in December.
Gold fell to roughly $4,015 during early Asian trading on Friday, pressured by US inflation data that bolstered expectations of a Federal Reserve rate hike later this year. The Personal Consumption Expenditures (PCE) price index rose 0.5% in September, matching forecasts, according to the Commerce Department’s Bureau of Economic Analysis.
"A stubbornly high inflationary outlook that continues to run hotter than Fed targets is paving the way for thoughts that the Fed will raise rates at the December meeting. That's ... the main drag on the gold market right now, and today’s PCE report did nothing to allay that fear," said David Meger, director of metals trading at High Ridge Futures.
The Federal Open Market Committee left rates unchanged at 3.75%-4% in its October meeting, and Fed Chair Kevin Warsh noted the central bank had not yet achieved price stability, adding, "We're working on it." Market pricing now reflects roughly a 75% probability of a rate hike in December, according to the CME FedWatch tool, which raises the opportunity cost of holding non-yielding gold.
TD Securities observed that while gold remains relatively resilient after the policy meeting, industrial precious metals such as silver and platinum-group metals are under pressure, reflecting broader macroeconomic headwinds and expectations of tighter policy.
Technical analysis shows spot gold trading below its 100-day simple moving average and the Bollinger middle band, with the Relative Strength Index at 38.23, indicating a bearish near-term bias. Immediate support lies near $3,995, while resistance is positioned around $4,115, $4,215 and $4,230.