• Gold price drifts higher to a fresh all-time high in Monday’s Asian session. 
  • The US PCE price index rose 2.7% YoY in August, in line with expectations. 
  • Traders await the Fedspeak later on Monday for fresh impetus. 

The Gold price (XAU/USD) extends its upside to a record high above the $3,800 psychological level during the Asian session on Monday. The precious metal edges higher after the US inflation data came in line with expectations, reinforcing bets that the US Federal Reserve (Fed) may continue with interest rate cuts later this year. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal. Additionally, geopolitical uncertainty could boost demand for safe-haven assets like Gold. 

Traders will keep an eye on the Fedspeak later on Monday. Fed Governor Christopher Waller, Cleveland Fed President Beth Hammack, St. Louis Fed President Alberto Musalem, New York Fed President John Williams and Atlanta Fed President Raphael Bostic are set to speak. Any hawkish comments from Fed officials might lift the US Dollar (USD) and undermine the USD-denominated commodity price.

Daily Digest Market Movers: Gold edges higher as US PCE data keeps Fed rate cut bets alive

  • US inflation, as measured by the US Personal Consumption Expenditures (PCE) Price Index, rose to 2.7% year-on-year in August from 2.6% in July, the US Bureau of Economic Analysis reported Friday. This figure came in line with the market consensus. 
  • The core PCE Price Index, which excludes volatile food and energy prices, rose 2.9% year-over-year in August, matching the increase in July and analysts’ estimates. 
  • On a monthly basis, the PCE and the core PCE increased 0.3% and 0.2%, respectively. 
  • “Monthly PCE data is in line, though personal income and spending were a tenth above expectations. Nothing from this data will prevent the Fed from carrying on with another cautious rate cut at the October meeting,” said Tai Wong, an independent metals trader.
  • Markets are now pricing in nearly an 88% odds of a Fed rate cut in October and a 65% possibility of another reduction in December, according to the CME FedWatch Tool.
  • US President Donald Trump will meet with the top four congressional leaders at the White House on Monday as the deadline for a possible government shutdown looms. Without funding legislation, parts of the government would close on Wednesday, the first day of the US government’s 2026 fiscal year. 

Gold’s positive view remains in place, but overbought RSI warrants caution for bulls

Gold price trades in positive territory on the day. The bullish tone of the precious metal remains intact in the longer term, with the price holding above the key 100-day Exponential Moving Average (EMA) on the daily chart. Nonetheless, the 14-day Relative Strength Index (RSI) stands above the midline near 75.90, indicating the overbought RSI condition. This suggests that further consolidation or a temporary sell-off cannot be ruled out before positioning for any near-term Gold upleg. 

The crucial resistance level for XAU/USD is seen in the $3,800-$3,810 zone, representing the psychological level and the upper boundary of the Bollinger Band. Sustained trading above this level could take the yellow metal to $3,850. 

On the downside, the initial support level for Gold is located at $3,722, the low of September 25. Red candlesticks closing below the mentioned level could expose $3,632, the low of September 19. 

Gold FAQs

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.