• Gold prices consolidate as investors focus on the upcoming US PCE data which can potentially have an effect on the Fed’s future interest rate policy
• Markets price in a 72.3% probability of an interest rate cut in September 2024
• BofA forecasts $3,000 per ounce over the next 12-18 months

The XAUUSD is consolidating ahead of the US Personal Consumption Expenditure (PCE) report, scheduled to be released on Friday, June 28.

PCE is the Fed's preferred measure of inflation.

A lower-than-expected PCE reading may contribute to a much anticipated rate cut. However, a stronger inflation reading could force the Fed to delay policy easing.
 

• 0.1% - Expected PCE
• 0.2% - Previous PCE

As of 06/25/2024 (03:18 CT), the markets are pricing in a 74.3% probability of a September 2024 rate cut, according to the CME FedWatch tool. (72.3% - 1 day prior; 53.4% - 1 month prior).

Lower interest rates could make zero-yielding gold a more attractive investment.

In addition, Fed officials Bowman along with Fed Cook and Fed Barkin will deliver their respective speeches this week.

With a potential rate cut on the horizon, Bank of America recently set a new target for gold at $3,000 over the next 12-18 months.

Support for gold could also come from both commercial (electronics and jewelry) and non-commercial (central bank and investor) buying.
 

On the technical side

The XAUUSD is currently trading below its 21 and 50 SMAs, but above its 100 SMA, indicating a bullish long-term trend, while signaling a negative short-term trend.

The Relative Strength Index (RSI) is floating in neutral territory, confirming the market's uncertain state ahead of key U.S. macroeconomic data.

On the upside, the 21-period, followed by the 50-period SMAs are the main target/resistance levels for the bulls, while on the downside, $2,315.66 could provide immediate support.

More By This Author:

GBPJPY To Close Above Psychologically Important 200 Level?
UK100 Crosses Back Above 50-Period SMA Ahead Of This Week’s UK Data Dump
BRN On Track To Post The First Weekly Gain In Four Weeks?