Gold Edges Lower Ahead of US PCE Data, Dollar Firms Slightly

During Wednesday's trading session, spot gold (XAU/USD) edged lower, currently trading near $4,620.91. The metal had hit a three-month high of $4,697 on Tuesday, but subsequently pulled back significantly due to profit-taking, dipping to a low of $4,605. The US dollar index has rebounded from recent lows and extended its gains, putting short-term pressure on dollar-denominated gold.

**PCE Data and Central Bank Meeting in Focus**

Markets are awaiting the release of the US Personal Consumption Expenditures (PCE) price index, due at 12:30 GMT. This data is a key inflation gauge for the Federal Reserve, and its performance will directly influence expectations for the future monetary policy path. According to reports, the market currently prices in roughly a 75% probability of a rate hike by year-end, and any upside surprise in inflation data could reinforce tightening expectations, pushing the dollar higher and pressuring gold in the near term. Additionally, markets are closely watching the upcoming Jackson Hole global central bank symposium for clearer interest rate guidance.

**Treasury Outlook and "Debasement Trade" Offer Support**

Despite short-term pressure on gold, the macro backdrop continues to provide solid support. Total US Treasury debt has surpassed $40 trillion, raising concerns over fiscal sustainability and rekindling investor interest in the "debasement trade." TD Securities noted that the US Treasury has recently expanded its long-dated bond buyback program, a move that is providing fresh upside momentum for the precious metals market. Against the backdrop of rapidly expanding government debt, gold's appeal as a key store of value against currency debasement remains intact.

**Technically Overbought Conditions Trigger Profit-Taking**

From a technical perspective, gold's "high-altitude dive" after approaching the $4,700 round number is mainly attributed to profit-taking following an overly rapid rally. Data shows that the 14-day Relative Strength Index (RSI) briefly rose to around 71, entering traditionally overbought territory, indicating that while upside momentum is strong, short-term risks of chasing highs are also increasing. Therefore, the current pullback is viewed more as a technical correction rather than a reversal of the long-term trend.