Gold rebounded on Wednesday after a softer core PCE inflation reading eased pressure from rising real yields that drove the metal's worst month since June. December futures climbed back to $4,212.30 an ounce, but the contract still sits well below its January all-time high after a month of losses tied to the Federal Reserve's September rate hike.
Gold clawed back part of its worst month since June on Wednesday after August's core PCE inflation reading came in below forecast, giving the metal its first real relief from a selloff built on rising real yields and a firmer dollar. December gold futures traded at $4,212.30 an ounce, up 0.78% on the session, after touching $4,224.40 in the first minutes of U.S. equity trading.
Cooler inflation data breaks the pressure
Core PCE rose 0.2% on the month for a 3.0% annual rate, below forecasts of 0.3% and 3.3%. Headline PCE came in at 3.4% annually against a 3.7% estimate. The softer print delivered the first genuine break in the pressure that had been building since the Federal Reserve hiked rates on September 16.
The bounce came from a deep hole. December futures had opened Tuesday at $4,150.10, the lowest opening price since August 5, after gold fell more than 3% on Monday as the 10-year Treasury yield climbed above 5.2% and the dollar index pushed past 101. The contract has lost 4.28% over five sessions and 7.52% over the past month.
A steep drop from January's record
Gold hit an all-time high of $5,589.38 on January 28, then shed 24.6% into this week. It fell more than 11% in June alone, its fourth straight monthly decline and worst quarter since 2013. The metal recovered to $4,489.80 by September 3, then gave that back after the Fed's first hike since 2023. Year over year, gold is still up 9.1%, the smallest annual gain in the current daily price series.
The session's three phases
Wednesday's trade moved in three stages. December futures fell as low as $4,145.20 overnight before buyers stepped in without letting the contract break that level. Yields then slipped in European trading as Fed speakers lowered expectations for further hikes, pushing futures toward $4,217.90 ahead of the release. When core PCE printed, the 2-year Treasury yield fell more than 6 basis points to 4.827% and gold spiked to $4,224.40 within the first hour of U.S. trading, a gain of $79.20 from the overnight low.
Support now sits at the $4,145.20 overnight low, while resistance comes in at the $4,224.40 session high and then $4,300. A daily close above $4,224 would confirm the bounce has buyers behind it, while a close back below $4,180 would signal sellers still control the tape heading into Friday's payrolls report.
Source: Investing.com
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