Gold advanced during the North American session on Friday, up 0.60% after the latest inflation report maintained the status quo, reinforcing dovish bets for further easing by the Federal Reserve (Fed). At the time of writing, XAU/USD trades at $3,774 after rebounding from daily lows of $3,734.
PCE data bolsters easing expectations
Market sentiment improved as traders digested fresh US data that kept Fed rate cut hopes alive. The Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) Price Index, matched estimates, holding below the 3% threshold reached earlier this year.
Meanwhile, September’s University of Michigan Consumer Sentiment survey showed a decline as households grew more cautious about prices and the labor market. Inflation expectations eased slightly, with Americans seeing a gradual decline in price pressures.
Fed commentary also added weight to dovish bets. Governor Michelle Bowman highlighted a fragile labor market, while Richmond Fed President Thomas Barkin noted spending strength across income brackets. In addition, US President Donald Trump’s newly announced tariffs on pharmaceuticals, furniture, and heavy trucks introduced another layer of uncertainty.
Daily market movers: bullion holds gains despite higher yields
- Gold rose as the US Dollar Index slipped 0.27% to 98.18
- US Treasury yields edged higher, with the 10-year note up 1 bps at 4.187%, while real yields climbed to 1.807%
- US core PCE inflation held steady at 2.9% YoY, with headline PCE ticking up to 2.7% YoY as projected
- The University of Michigan’s sentiment index fell to 55.1 versus 55.4 expected, with inflation expectations easing modestly
- The CME FedWatch Tool shows markets pricing in an 88% probability of an October rate cut and a 65% chance of another in December
Technical outlook: XAU/USD eyes all-time high
Gold resumed its uptrend, approaching the record high of $3,791 near the $3,800 psychological level. The Relative Strength Index (RSI) remains in overbought territory between 70–80, signaling bullish momentum is still intact.
On the downside, a drop below $3,750 could expose the $3,700 support, followed by the 20-day Simple Moving Average (SMA) at $3,648.
