Gold (XAU/USD) held firm during Friday’s North American session, on track to finish the week nearly flat above the $4,200 handle as traders position for next week’s Federal Reserve policy decision. At the time of writing, XAU/USD trades near $4,216 after retreating from intraday highs of $4,259.
XAU/USD steady as markets brace for expected Fed rate cut
The week closed with the release of the Fed’s preferred inflation gauge, the core PCE Price Index, which was little changed in September and edged modestly toward the 3% level – still above the Fed’s 2% target. While the data alone could justify a Fed pause, softer labor-market indicators and dovish commentary from Fed officials have strengthened expectations of a rate cut.
Consumer sentiment added to the cautious optimism. The University of Michigan reported a mild improvement in US household outlook, with inflation expectations easing despite concerns that tariff-related price impacts may still filter through.
A Reuters poll earlier in the week showed economists heavily favoring a December rate cut, supporting the broader bullish bias in Gold. CME’s FedWatch tool now assigns an 87.2% probability to a 25 bps cut at next week’s meeting.
Daily market movers: Gold firms as Treasury yields edge higher
The US Dollar Index (DXY) was little changed around 98.93.
The US 10-year Treasury yield rose nearly four basis points to 4.141%, while real yields climbed two bps to 1.881% — a typically bearish force for Gold due to the inverse relationship.
Core PCE increased 0.2% MoM in September, matching August and market forecasts. Annual core PCE eased from 2.9% to 2.8%, reinforcing a slow but steady cooling in inflation.
The University of Michigan Consumer Sentiment index improved to 53.3, beating expectations of 52 and rising from November’s 51. Sentiment remains fragile, but easing one-year and five-year inflation expectations – at 4.1% and 3.2%, respectively — signal growing confidence that price pressures are abating.
Technical analysis: gold price consolidates as momentum softens
Gold’s broader uptrend remains intact, but Friday’s price action signals a potential consolidation phase between $4,200 and $4,250 ahead of the Fed’s decision. Momentum indicators such as the RSI still lean bullish, though the index has flattened near 61, suggesting reduced upward drive.
A break above $4,250 would clear the way for a move toward $4,300 and the all-time high at $4,381. On the downside, a drop below $4,200 would expose initial support at the 20-day SMA near $4,124, followed by $4,100 and the 50-day SMA at $4,059.
