Gold News: XAUUSD Stalls Below $4,700 as Wednesday’s PCE Inflation Report Nears

Gold Stalled Below $4,700 and Now PCE Gets the Next Word

Gold hit its strongest level in three months on Tuesday and could not hold it. The rally that started with Treasury’s buyback announcement last week ran into $4,700 and sellers were waiting. The pullback is profit-taking after a 5% gain. The buyback trade underneath the metal has not broken.

The dollar is still sitting at a three-month low and yields are off their highs. PCE inflation data Wednesday and Fed Chair Kevin Warsh at Jackson Hole on Friday are the two events that either confirm the trade or take it apart. The market stalled just under a long-term 50% resistance level that has turned back every attempt to clear it.

At 18:07 GMT, Spot Gold (XAUUSD) was trading at $4,646.20, down $5.03 or 0.11%. The market reached $4,697.11 before sellers pushed it down to $4,605.29.

The Buyback Trade Got Gold Here but $4,700 Wants More

Gold ran more than 5% last week after Treasury said it would at least double purchases of older long-term debt from $2 billion to $4 billion per operation. Reports that the General Account could fund the program made Bessent’s buying power look larger than the market first believed. The dollar broke to a three-month low. Long-term yields pulled back. The fiscal-risk trade reopened and buyers grabbed it.

Tuesday’s high near $4,700 was where the easy money ended. Bart Melek at TD Securities called it a drop in momentum near strong resistance. Gold is still above the prices that held it back for months. The Treasury bid underneath the market has not disappeared. It ran into a level where profit-taking was the rational trade after a 5% move in a week, and the buyers who drove the rally are now waiting for the next piece of data before they add.

The dollar near its lows is keeping sellers from pressing hard. Deficits still have to be funded. New bonds still have to be sold. The buyback announcement bought time on the long end of the curve. It did not remove the supply of duration coming behind it. Gold has support from the weaker dollar and lower yields. That support depends on the bond market continuing to cooperate, and the bond market has PCE and Warsh still ahead of it this week.

PCE Wednesday and Warsh Friday Decide Whether the Rally Reloads

Wednesday’s PCE report arrives with gold near a three-month high, the dollar already down hard and September rate-hike odds at 38%. Softer CPI and PPI earlier this month helped bring those odds down. The rate positioning has already moved in gold’s favor. That is why the data risk matters more than usual. The repricing has happened. PCE tells you whether it went too far.

Warsh speaks Friday at Jackson Hole after PCE has already set the week’s tone. He speaks with Treasury buybacks sitting behind every bond market conversation this month. The market does not have a clear map for rates or the long bond, and any comment on inflation, debt supply or long-term yields from the Fed Chair can move the dollar and repricing in either direction.

China’s net gold imports through Hong Kong rose about 11% in July from the prior month. Stronger investment demand after recent price weakness. Iran promised to retaliate against expanded U.S. sanctions while also signaling interest in reviving talks. The geopolitical bid has not been behind Tuesday’s selling. It is sitting underneath the market keeping buyers close on every dip.

Daily Spot Gold (XAUUSD) Analysis

Spot gold is edging slightly lower by mid-session Tuesday after traders clawed back some of the earlier losses caused by light profit-taking.

Today’s intraday high at $4,697.11 fell just under long-term 50% level resistance at $4,744.34. Currently, spot gold is in a position to form a potentially bearish closing price reversal top on a close under $4,651.24.

If a closing price reversal top were to form and were confirmed on Wednesday, we could see renewed selling pressure with the first target a long-term 61.8% level at $4,541.88, followed by the 200-day moving average at $4,518.84.

With the main trend up, value-seekers could feel comfortable stepping in on a pullback into the 200-day moving average.

What to Watch

Gold corrected from $4,700 after a 5% rally ran into long-term resistance and the next two events on the calendar. PCE Wednesday arrives first. Warsh at Jackson Hole Friday carries more weight. The buyback story, the weaker dollar and lower yields are all still in place. Tuesday’s pullback was profit-taking at resistance, not a reversal of the trade that got gold here.

JPMorgan cut its near-term fourth-quarter target to $4,500 in early July. Spot moved above that level by August 19. Another August outlook from the bank still pointed to $6,000 for the fourth quarter. The spread between those targets tells you how much the bond market is driving the range right now.

Gold stalled just under the long-term 50% resistance level and is in a position to form a closing price reversal top. The 200-day moving average is the pullback level where value buyers step in. The trend is up and the dollar at a three-month low keeps it that way. Sellers need PCE or Warsh to rebuild the rate case. Until one of them does, this correction has limits.

If you’d like to know more about how to trade gold, please visit our educational area.