Gold has achieved a historic milestone by surging to an all-time high, breaching the remarkable $2,100 per ounce mark. As financial markets shift their focus to the upcoming release of the US Personal Consumption Expenditures (PCE) inflation report scheduled for Friday, the significance of this event becomes increasingly apparent. This report holds the potential to offer critical insights into future monetary policy adjustments and has far-reaching implications that extend across various sectors, influencing the strength of the US Dollar, stock market performance, and the value of gold.
Taking a closer look at the daily chart for the XAU/USD pair, we observe the potential for an upward trajectory in risk sentiment. Notably, gold's recent achievement of reaching an all-time high above $2,100 per ounce marks a significant milestone. While a minor correction followed this historic moment, its importance remains undeniable.
In this context, the Core Personal Consumption Expenditures (PCE) Price Index takes center stage. This index is the favored measure of inflation for the US Federal Reserve. The annual PCE inflation rate in the US dipped to 3% in October 2023, a level not witnessed since March 2021. Projections for the upcoming PCE report, set to be unveiled this Friday, suggest a potential decline to either 2.8% or 2.9%. Importantly, if these figures fail to reflect a moderation in inflation, it could signal that the US economy is still operating at an elevated temperature. Such a scenario might suggest that any adjustment to the policy stance could be premature, impacting not only the trajectory of monetary policy but also influencing the direction of the US Dollar, the performance of the stock market, and, of course, the value of gold.
