Gold fluctuates ahead of US PCE reading

• US Q2 GDP exceeded expectations at 3.0%
   
• Initial jobless claims fell to 231,000, better than forecast
   
• Upcoming PCE data could influence gold prices
   
• Geopolitical tensions and support gold demand

The XAUUSD briefly touched the $2,512 level as the U.S. dollar gained strength following the release of robust economic data on Thursday, August 29th.

US Q2 GDP came in higher than expected at 3.0% vs. 2.8% forecast, while initial jobless claims fell to 231,000 vs. 232K forecast.

This may have reduced the likelihood of a significant rate cut by the Fed in September, making zero-yielding gold less attractive to investors.

Market attention is now focused on upcoming U.S. inflation data, particularly the core Personal Consumption Expenditures (PCE) price index.

PCE is the Fed's preferred measure of inflation. A lower-than-expected PCE reading could revive hopes for a significant interest rate cut, potentially providing some relief for gold prices.
 

At the time of writing, the market is pricing in a 67% chance of a 25 basis point rate cut in September (source: CME FedWatch Tool).

Geopolitical tensions are also having an impact on gold prices. Escalating conflicts in the Middle East could continue to support the yellow metal and drive investors to safe-haven assets.

On the demand side, gold ETFs saw a moderate increase in net inflows (+$403 million) last week (source: World Gold Council), while China - one of the largest consumers of gold - increased its imports by 17% last July, the first increase since March 2024.