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Gold price plunges to a new monthly low, on track for significant weekly losses.
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Expectations of Fed rate cuts and a weaker US Dollar fail to support XAU/USD or halt its decline.
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Investors await the US PCE Price Index release for clearer direction on the metal’s next move.
Gold (XAU/USD) extended its intraday decline during early European trading on Friday, dropping to the $3,282–$3,283 region—a fresh monthly low. The decline is largely attributed to reduced safe-haven demand, as optimism around the Israel-Iran ceasefire supports a risk-on market mood. Additionally, traders are likely engaging in repositioning ahead of the highly anticipated US PCE inflation report, further weighing on the precious metal.
The US Personal Consumption Expenditures (PCE) Price Index, due later today, is expected to provide critical insight into the Federal Reserve’s potential interest rate trajectory. The outcome of this report will likely influence both US Dollar (USD) dynamics and Gold price direction. Although rate cut speculation and concerns about the Fed’s independence have dragged the USD to multi-year lows, they have failed to support XAU/USD so far.
Daily Digest Market Movers: Gold Weakens Despite USD Struggles and Dovish Fed Expectations
- On Thursday, the Commerce Department’s final estimate revealed that the US economy contracted more than initially reported in Q1 2025, shrinking by an annualized 0.5% due to weak consumer spending and the adverse effects of elevated tariffs. In the labor market, initial jobless claims dropped to 236,000 for the week ending June 21, but continuing claims rose to 1.974 million—the highest level since November 2021—suggesting a softening hiring environment.
- These data points have strengthened expectations for a Fed rate cut as early as July, which could ease borrowing costs further by year-end. This dovish outlook has kept the USD under pressure, falling to its lowest level since March 2022. While this would typically support gold, the metal continues to struggle amid strong risk appetite in global markets.
- Investors are now focused on May’s PCE Price Index figures. Forecasts suggest a 0.1% monthly rise in the core reading and a 2.6% year-over-year increase. A hotter-than-expected outcome could reinforce Fed Chair Jerome Powell’s cautious stance and offer the USD a brief lift. Powell recently reaffirmed that the Fed prefers to wait for clearer signs of inflation trends, particularly due to the impact of recent tariffs. This stance has invited renewed criticism from former President Donald Trump, who is reportedly considering replacing Powell before his term ends, raising fresh concerns about the Fed’s independence.
- This political uncertainty may mute any USD strength following the PCE release, keeping the broader bias for gold tilted to the upside. As a result, any near-term dips in gold could be viewed as buying opportunities.
Gold Price Technical Outlook: Bearish Pressure Builds Below Key Support
From a technical standpoint, Gold’s break below the $3,300 mark and the 200-period Simple Moving Average (SMA) on the 4-hour chart signals growing bearish momentum. This move comes after a breakdown from a short-term ascending channel earlier in the week. Oscillators on the daily chart have begun gaining negative traction, indicating that the sell-off could deepen.
If selling continues, XAU/USD may target the $3,245 zone, with further declines potentially extending to the $3,210–$3,200 support band and even the $3,175 level.
On the upside, immediate resistance lies near the $3,324–$3,325 area, followed by the overnight swing high at around $3,350. Additional resistance is found at the former channel support near $3,368–$3,370, which could cap any upside attempts. A sustained move above this zone could push gold back toward the $3,400 level. A strong breakout above this point would invalidate the current bearish outlook and shift momentum in favor of the bulls.
