Gold Price Forecast: XAU/USD gradually rises amid rising US yields, after strong US PCE data.

• The strength of the US economy shown by the latest data raises the prospects of a Fed rate hike in June, boosting the dollar.
• Wall Street rises despite the rise in the Fed’s inflation gauge, with core PCE at 4.7% yoy.
• Rising US Treasury yields and hawkish comments from the Fed could hurt Gold’s rally.

Gold price is regaining some ground but remains far from recapturing the $1,950 mark after strong economic data from the United States (US) suggests the Federal Reserve (Fed) may opt for a new rise in June. As a result, US Treasury yields are rising as the US dollar (USD) hits new two-month highs against a basket of peers. XAU/USD is trading at $1,940.21, with a minimum gain of 0.03%.

Wall Street rises despite inflationary fears; consumer and business spending show resilience

Wall Street posted solid gains, even though the Federal Reserve’s (Fed) preferred inflation gauge, core personal consumption spending (PCE), which excludes volatile items like food and energy, beat estimates of 4.6%. and rose 4.7% year-on-year in April. Along the same lines, headline inflation rose from 4.2% to 4.4% year-on-year after the publication of the minutes of the Fed’s May meeting, which showed the willingness of the US central bank to pause its tightening cycle.

In a different vein, the final May University of Michigan consumer sentiment reading beat estimates of 57.7 to 59.2, but was down from 63.5 previously. The same survey revealed that US citizens’ one-year inflation expectations fell from 4.5% to 4.1% at the end of the year, while for a 5-year horizon they stood at 3.1%, above 3.0% in April.

Earlier, April durable goods orders rose 1.1% mom, above estimates for a 1% drop but down from a staggering 3.3% in March, indicating that consumer and business spending continues to resisting, another reason that justifies Jerome Powell and company to continue raising rates, since the economy opposes resistance to the rise in interest rates.

Consequently, US Treasury yields continued to rise, with the 10-year yield at 3.851%, its highest level since March 10, slowing the rally in Gold. Another factor that could weigh on The appetite for XAU/USD is US real yields, which are at 1.60%, above Thursday’s close (1.57%).

Recently, Cleveland Fed President Loretta Mester maintained her hawkish stance, confirming that inflation is too high in an interview on CNBC. She said that she would revise her inflation forecast upwards and that more data would help her decide on the June meeting, while stressing that “everything is on the table” for the next FOMC.

XAU/USD Price Analysis: Technical Perspective

The XAU/USD pair has a neutral to bearish bias, although it continues to trade within the confines of important support and resistance levels. As support, the 100-day EMA at $1,933.85 continues to cushion the decline, while the psychological price level of $1,950 keeps price action range bound at $17. If the XAU/USD sellers call for the former, that could open the door for a test of the $1,900 figure before challenging the 200-day EMA at $1,883.27. On the other hand, if XAU/USD buyers conquer the $1,950 figure, the yellow metal could be on its way to challenge the $1,973.32 area, where the 50 day EMA rests.