XAU/USD eyes US PCE inflation data for next move

• Gold consolidates rebound from eight-week lows, while trading below $4,200 early Wednesday.
• US Dollar sees a profit-taking pullback ahead of US ADP jobs and PCE Inflation data.
• Gold reverts to the key support-turned-resistance near $4,185, with daily RSI still bearish.

Gold is consolidating the previous rebound from an eight-week low of $4,110 in Asia on Wednesday, although it remains below $4,200 ahead of the US ADP jobs report and core Personal Consumption Expenditures (PCE) Price Index data.

Gold is struggling to capitalize on Tuesday’s late rebound, with Oil prices seeing a renewed uptick after Axios reports that Qatar-mediated diplomatic talks between the United States (US) and Iran yielded little progress. In fact, the impasse sparks fear of a fresh outbreak of military conflict between the two warring nations.

These renewed geopolitical concerns and rebounding oil price-driven inflation worries are limiting further upside in Gold.

Additionally, traders refrain from placing fresh bets on the bullion, in anticipation of the critical US core PCE Price Index data, the Federal Reserve’s (Fed) preferred inflation measure, which could shed fresh light on the central bank’s interest rate outlook.

Markets are now pricing in a 47% chance of a Fed rate hike in October, according to CME Group’s FedWatch Tool, down sharply from just over 70% seen a day ago.

October Fed rate-hike expectations declined after New York Fed President John Williams said that Fed policymakers may only need to deliver one more hike this year to get inflation back on track to the central bank's 2% target.

Williams’ less urgency for rate hikes weighed heavily on US Treasury bond yields across the curve, fuelling a correction in the US Dollar (USD) and the rebound in Gold price.

Fed’s Williams delivered a moderately hawkish message, with a FXS Speechtracker score of 6.4 slightly above the 6.2 historical average, signaling continuity rather than a tonal shift. The emphasis on “no need for urgency” after the September rate hike, combined with guidance that one further hike is likely if the economy meets expectations, underscores a data-dependent stance that still prioritizes getting inflation back to 2% and preventing it from becoming entrenched.

The FXS Fed Sentiment Index fell by 1.43 points to 144.29, indicating a modest pullback in perceived hawkishness even as the index remains well above the neutral 100 mark.

Gold’s swift recovery was also helped by a sharp sell-off in Oil prices amid renewed hopes of diplomacy as the US-Iran talks were set to resume, with Qatar as a mediator.

In the daily chart, XAU/USD trades at $4,175.27, extending its retreat below all the major simple moving averages and keeping a bearish near-term bias in place. The 21-day SMA at $4,320.18, the 50-day SMA at $4,322.71, the 100-day SMA at $4,287.98 and the 200-day SMA at $4,538.15 all sit overhead as dynamic resistance, reinforcing the idea of a market now capped by previously supportive levels. The Relative Strength Index (14) at 39.78 hovers just below neutral territory, hinting at persistent but not extreme bearish momentum after the recent slide.

On the topside, immediate resistance aligns with the descending trend line coming in near $4,312.54, ahead of a dense cluster formed by the short- and medium-term SMAs around $4,320–$4,323, with the 100-day SMA at $4,287.98 and the longer-term 200-day SMA at $4,538.15 marking higher barriers if a deeper rebound unfolds. On the downside, the key structural support remains the rising trend line drawn from the $3,999.15 area, which would be the next bearish objective on a continuation lower and whose loss would likely open the door to a broader corrective phase.