Gold Price Forecast: XAU/USD corrects to near $4,620 in countdown to US PCE Inflation data

Gold prices (XAU/USD) experienced a 0.75% decline, settling near $4,620 during Wednesday's European trading session. The precious metal paused its rally following a fresh three-month high of $4,697 the day before, as investors grew cautious ahead of the US Personal Consumption Expenditure Price Index (PCE) data for July and Fed Chairman Kevin Warsh's remarks at the Jackson Hole Symposium.

The core PCE inflation, closely monitored by Federal Reserve officials, is anticipated to remain steady at 3.3% year-over-year (YoY) with monthly growth of 0.2%, surpassing the June reading of 0.1%. Investors' attention will be focused on the PCE inflation data to gauge the Federal Reserve's monetary policy outlook. A stable inflation trend could dampen expectations for further interest rate hikes, which have diminished recently following the weak Nonfarm Payrolls (NFP) data for July.

DBS strategists highlighted Fed Chairman Kevin Warsh's Jackson Hole keynote on Friday, August 28, as the most significant event of the week, although they emphasized that the gathering is more of a credibility event rather than a rate-signalling one. The past two days of a decline in the 30-year yield offer only a temporary reprieve, not a resolution, despite US Treasury Secretary Scott Bessent's decision to expand long-bond buybacks to calm markets.

The technical analysis, aided by AI, indicates that XAU/USD is trading at $4,621.08 with a bullish near-term bias, as the metal is above the 20-period Exponential Moving Average ($4,411.62) and the 23.6% Fibonacci retracement ($4,338.71). The 38.2% retracement level at $4,580.10 sees buyers in control, while the RSI of 68.77 approaches overbought territory, hinting at strong but stretched upside momentum.

The next resistance levels are the 50.0% Fibonacci retracement ($4,775.19) and the 61.8% level ($4,970.29), with higher hurdles at the 78.6% retracement ($5,248.05) and the cycle high reference ($5,601.87). On the downside, immediate support is at the 38.2% retracement ($4,580.10), followed by the 20-period EMA ($4,411.62), and a deeper pullback would expose the 23.6% Fibonacci retracement ($4,338.71) as the next significant demand area.