Gold (XAUUSD) Price Forecast: Will PCE Data Trigger a Gold Breakout or Breakdown?

Gold Price Holds Near $3750 as Traders Await Fed-Focused PCE Data

Gold is consolidating around $3750 on Friday as markets brace for the release of the U.S. Core PCE inflation report—an event likely to dictate whether prices break to fresh record highs or retreat toward support.

At 10:26 GMT, XAU/USD is trading $3750.00, up $0.56 or +0.01%.

This week’s stronger U.S. macroeconomic data has dampened expectations for near-term Fed easing. Revised Q2 GDP growth came in above prior estimates, jobless claims fell, and new home sales surged 20% in August. The market has responded by paring back rate cut bets, with odds for October easing down to 87% from 91%, and December to 62% from 76%, according to the CME FedWatch Tool.

Kansas City Fed President Jeffrey Schmid reinforced a hawkish stance, saying inflation “remains too high” and describing policy as only “slightly restrictive.” That has pushed the U.S. Dollar Index to its strongest weekly performance in two months—providing headwinds for gold, which typically moves inversely to the dollar and real yields.

PCE Inflation to Set Direction for Fed Policy and Gold Price

The Core PCE index—the Fed’s preferred inflation metric—is expected to rise 0.21% month-over-month in August, down from July’s 0.27%. Headline PCE is projected at 0.3%. But economists warn of upside risks due to recently imposed tariffs, which Goldman Sachs estimates could add 0.10 percentage points to this month’s inflation print.

Any upside surprise could further reduce the probability of rate cuts in 2025, while a softer reading would likely revive dovish sentiment across risk assets. Rate-sensitive gold will be particularly exposed to either outcome.

Mixed Physical Demand: China Discounts Deepen, India Remains Firm

Physical demand trends are mixed. Chinese discounts widened to $31–$71 per ounce—the largest in years—as investor focus shifts to equities, with the CSI300 Index climbing 2% this week. However, India remains a source of strength, with premiums at up to $7 per ounce amid festival-season buying. Steady bar demand in Singapore, Hong Kong, and Japan underscores continued retail interest in bullion.

Gold Price Forecast: Breakout or Pullback Hinges on PCE Outcome

Gold is trading above the minor pivot at $3709.61 and just below record resistance at $3791.26. Two clear scenarios emerge:

• Bullish Case: A cooler-than-expected Core PCE reading would likely trigger a breakout above $3791.26, opening the door for price discovery into uncharted territory. In that case, traders could look to ride momentum above the main top with stops placed below $3709.61.
• Bearish Case: A stronger PCE print would reinforce the Fed’s restrictive stance, sending gold below $3709.61 and exposing the support band between $3627.96 and $3612.83. A break below that zone would bring the 50-day moving average at $3476.90 into play.

The inflation report will be pivotal. Until then, gold remains rangebound but coiled for movement in either direction.

More Information in our Economic Calendar.