After gaining a 5% upside, Gold has managed to cross the half-year mark in the spot & futures market. However, experts believe that the support located at the $1900 remains weak amid fears of future rate hikes from the Fed.
If we look at the front-month gold contract for August on the NYC, it settled around $1921, which is 0.6% or around $11.50 higher. In addition, the gold's low for the session was $1908.15, which is higher than the $1900 support.
Similarly, spot gold which tracks the prices of physical gold, was also up and last seen trading around $1919.76, which is a gain of 0.6%.
PCE Index Reading Supports Gold Prices
The PCE ( Personal Consumption Expenditures) index reading was in line with the economist's readings which showed that inflation is slowing down. This caused the non-yielding assets such as gold to rise higher.
After all, the Federal Reserve closely watches the core PCE as well as the headline PCE index to decide its interest rate policy. If we look at the headline PCE, it was seen at around 6.39%, while the CPE increased by 4%. Both of these indexes are used to track inflation, and the reading is showing that the expansion of inflation is indeed slow.
However, we also need to consider the fact that Fed can't tolerate anything higher than 2% on a yearly basis. That's why the interest rate in the USA today stands near 5%, which is one of the highest levels in several years.
To conclude, the overall picture of the economic data shows a slowdown in inflation, but it still remains higher than the Fed's target. According to some experts, the housing sector and the increased labor costs are the major reasons behind high inflation in the last few years.
Overall, it appears that any signal from the Fed about an end to its rate hike policy will further strengthen Gold prices. After all, we have already seen the Gold prices jump in mere hopes of rate cuts after the recent inflation reading.