Lower Despite Friday’s Benign US PCE Deflator

Gold is 0.2% lower in the Asia-Pac session, after closing 0.7% lower at $2327.33 on Friday. The yellow metal was marginally lower on the week.

• In terms of fundamental drivers, the market has embraced the idea that the Federal Reserve will stick to recent signalling that it needs more evidence that inflation is cooling before it can pivot to rate cuts.
• On Friday, no upside surprise in the much-awaited PCE price data prevented further erosion in the Fed outlook. The market is still priced for at least one rate cut this year, though it is not fully priced until December.
• According to MNI’s technicals team, a short-term bear cycle in gold remains in play, for now, although the recent move down appears to be a correction that is allowing an overbought condition to unwind.
• A resumption of gains would open $2452.5 next, a Fibonacci projection. The 50-day EMA, at $2307.8, represents a key support.