Why Gold could fall even if PCE data comes up weak

Precious metals are on the front foot despite the mixed bag of economic data this morning, commodity analysts at TD Securities note.

Hot PCE data to push Gold higher

“Traders will continue to watch the data like hawks, particularly as it represents a key catalyst for the macro traders who have thus far been happy to remain underpositioned in Gold (XAU/USD) for the coming Fed cutting cycle.”

“In this sense, the PCE data will be top of mind after the below consensus CPI and PPI data, and we look for the core segment to advance at its softest monthly pace of the year at 0.13%. Further signs that inflation is easing could start to generate more certainty around the Fed’s cutting path and finally get the macro community comfortable getting back into the market.”

“On the flip side however, we see only limited scope for downside should data come in hot. Indeed, Commodity Trading Advisors (CTAs) hold a margin of safety above $2,208/oz before any material selling, while physical demand from central banks and Asian precious metals appetite continues to support the market.”