Gold prices edged down in early Wednesday trading and are currently holding just above the $4,200 level. The precious metal is on a losing streak this week, having declined in every session so far. This comes as gold bulls remain cautious ahead of key economic data releases, including Friday’s PCE inflation report. As the Federal Reserve’s preferred measure of inflation, the PCE reading is likely to influence expectations for the Fed’s rate path, which in turn will affect the US dollar and ultimately gold prices, given the inverted price correlation between the two assets. Meanwhile, hopes of a near-term resolution to the war in Ukraine have faded, and tensions are rising again, particularly following the Russian President’s recent threats of conflict with Europe. Against this backdrop, featuring a bearish outlook for the US dollar and renewed geopolitical instability enhancing gold’s safe-haven appeal, there may be scope for a rebound in gold prices, especially if upcoming economic data confirms a cooling US economy and stabilising inflation. Such a scenario would likely result in further weakness for the US dollar and renewed gains for bullion.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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