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• Gold price bounced from the daily low of $2,356 on Friday. It was then seen at around $2,385.
• The Fed's preferred inflation gauge showed mixed results, edging closer to the 2% target.
• US Treasury yields slumped as bonds rallied, signaling potential for multiple Fed rate cuts this year.

The price of gold made a U-turn after diving to a two-week low of $2,353. It edged higher some 0.80% as market participants seemed secure that the Federal Reserve will lower interest rates at the September meeting, following a soft inflation report. The XAU/USD was seen trading at around $2,385 after bouncing off the daily low of $2,356.

The US Bureau of Economic Analysis (BEA) revealed that the Fed’s favorite inflation gauge, the Personal Consumption Expenditure Price Index (PCE), ticked a tenth higher monthly than May’s data. It dipped as foreseen in the twelve months to June timeframe, though seemed close to hitting the Fed’s 2% goal.

June’s Core PCE edged up a tenth every month, while the year-over-year rate was unchanged, above projections. Following the data, US bonds rallied, and consequently, US Treasury yields slumped, with the 10-year note seen sliding four and a half basis points to 4.202%.

Sources cited by Reuters noted, “Today's mixed-to-weaker U.S. data suggests inflationary pressures and economic activity are waning, paving the way for the Fed to cut rates twice this year.”

Next week, the Federal Reserve will make its latest monetary policy decision. The central bank is expected to keep rates unchanged, but the meeting could pave the way for the first cut at the September meeting.

Market Movers: Gold Price Bounced Off Weekly Lows

• The US PCE in June rose by 0.1% month-over-month and 2.5% year-over-year. Both figures were as expected, with the annual rate falling from 2.6%.
• Core PCE expanded by 0.2% month-over-month, exceeding estimates and May’s figure. On an annual basis, Core PCE rose by 2.6%, higher than forecasts and unchanged from the prior month’s reading.
• The University of Michigan Consumer Sentiment survey, in its final reading, jumped to 66.4, missing projections of 66.
• Inflation expectations for one year decreased from 3% to 2.9%, while for a five-year period, they remained unchanged at 3%.
• Data from the Chicago Board of Trade (CBOT) shows that traders are pricing in 55 basis points (bps) of easing towards the end of the year, as indicated by the December 2024 fed funds rate futures contract.

Technical Analysis: Price of Gold Climbed but Remained Below $2,400

Gold prices remained upward-biased on Friday, snapping two days of losses and forming a ‘bullish harami’ two-candle chart. Momentum seemed to hint that buyers were still in charge, as depicted by the Relative Strength Index (RSI), which pierced above the 50-neutral line and opened the door for further upside.

XAU/USD buyers must reclaim the $2,400 level in the coming days before they can push prices above the psychological $2,450 area. A breach of the latter would expose the all-time high at around $2,483, followed by the $2,500 mark.

On the flip side, if XAU/USD continues to edge lower and drop below the 50-day moving average (DMA) at $2,359, further losses would be in the cards. The next support would be the July 25 daily low of $2,353. Once those levels are removed, the 100-DMA would be up next at the $2,324 level, followed by the $2,300 mark.

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