XAUUSD consolidates ahead of US PCE

• Gold consolidates as investors focus on Friday's PCE data
   
• PCE to influence Fed’s interest rate policy
   
• Markets expect 74.3% chance of US rate cut in September
   
• BofA forecast: $3,000 by 2025

The XAUUSD is consolidating ahead of the US Personal Consumption Expenditure (PCE) report, scheduled to be released on Friday, June 28.
 

PCE is the Fed's preferred measure of inflation.
 

A lower-than-expected PCE reading may contribute to a much anticipated rate cut. However, a stronger inflation reading could force the Fed to delay policy easing.
 

• 0.1% - Expected PCE
• 0.2% - Previous PCE

As of 06/25/2024 (03:18 CT), the markets are pricing in a 74.3% probability of a September 2024 rate cut, according to the CME FedWatch tool. (72.3% - 1 day prior; 53.4% - 1 month prior).

Lower interest rates could make zero-yielding gold a more attractive investment.

In addition, Fed officials Bowman along with Fed Cook and Fed Barkin will deliver their respective speeches this week.

With a potential rate cut on the horizon, Bank of America recently set a new target for gold at $3,000 over the next 12-18 months.

Support for gold could also come from both commercial (electronics and jewelry) and non-commercial (central bank and investor) buying.

On the technical side

The XAUUSD is currently trading below its 21 and 50 SMAs, but above its 100 SMA, indicating a bullish long-term trend, while signaling a negative short-term trend.

The Relative Strength Index (RSI) is floating in neutral territory, confirming the market's uncertain state ahead of key U.S. macroeconomic data.

On the upside, the 21-period, followed by the 50-period SMAs are the main target/resistance levels for the bulls, while on the downside, $2,315.66 could provide immediate support.