Gold prices (XAU/USD) retreated on Wednesday, down 0.6%, after US inflation data came in above the Federal Reserve’s (Fed) 2% goal but below estimates, prompting investors to price in a less hawkish central bank than expected. The XAU/USD trades at $4,155 at the time of writing.
XAU/USD slips despite softer inflation as Treasury yields overpower Fed repricing
The Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) Price Index, was unchanged from July’s print at 3.0% annually in August, below forecasts of 3.3%. The headline print was 3.4% for the same period, unchanged from July’s and beneath forecasts for a rise to 3.7%.
The data triggered a reaction by money markets, with traders making a U-turn and now expecting the Fed to hold rates at the October meeting, with odds standing near 62%, according to Prime Terminal.
Ahead of the inflation release, ADP's jobs data showed that private companies added 90K workers, exceeding estimates of 70K and confirming Fed Chair Kevin Warsh's comments that the labour market is consistent with full employment.
Given the backdrop, the Greenback's mixed reaction is evident in the US Dollar Index (DXY). The DXY, which measures the performance of the US Dollar against six currencies, fell to a low of 101.02 before reclaiming the 101.30 area and turned positive on the day.
US Treasury yields are also rising sharply with the US 30-year bond yield soaring 8 basis points to 5.647%. The US 10-year benchmark note yields 5.302%, rising nearly 7 basis points.
Other data revealed that the US economy grew 2.2% in Q2 2026 (final reading), exceeding forecasts of 1.5% growth and reaffirming its resilience. Meanwhile, the trade deficit widened in August, based on data from the US Commerce Department.
Traders’ attention turns to further Fed speakers and jobless claims ahead of the release of September’s Nonfarm Payrolls data on Friday.
XAU/USD technical analysis: Gold retreats below $4,150
Gold’s daily chart shows that the downtrend remains intact as the non-yielding metal has failed to reclaim the bottom trendline of a "bullish wedge." Although momentum has turned moderately bullish, the Relative Strength Index (RSI) remains bearish, suggesting sellers are in control. Therefore, the path of least resistance is downward.
The first support for XAU/USD is the $4,100 mark. Below, the next support is the July 29 swing low of $3,996, followed by the July 17 low at $3,959. Once those levels are hurdled, the next area of interest is the year-to-date (YTD) low at $3,941.
For a bullish reversal, Gold must reclaim the 100-day Simple Moving Average (SMA) at $4,287.
Comments
Log in or sign up to join the conversation.