Gold Retreats to Around $4,600 from Three-Month High After US PCE Data

During the Asian morning session, spot gold pulled back to around $4,621, after earlier approaching the $4,700 level. The retreat followed US PCE inflation data that broadly met market expectations, reinforcing views that the Federal Reserve will maintain tighter monetary policy in the near term, which weighed on the appeal of non-yielding gold.

**Short-Term Profit-Taking and Overbought Correction**

The pullback in gold occurred against a nuanced macro backdrop, as the US dollar and Treasury yields both moved lower, which theoretically should have supported bullion. This suggests the selling pressure was largely technical in nature. Market sources indicated that after a sustained rally that pushed prices to multi-month highs, the 14-day Relative Strength Index (RSI) climbed to around 71, entering traditionally overbought territory, prompting significant profit-taking. Notable selling emerged near the $4,700 round-number level, triggering a rapid price correction.

**Inflation Data Shapes Rate Outlook**

The PCE data served as the direct catalyst for gold's decline. Market analysts believe that if core inflation proves stickier than the Fed's target, it would strengthen the case for further policy action at the next meeting. Such expectations fueled a potential rebound in US Treasury yields and the dollar, directly pressuring gold's holding costs. Reports suggest the market's focus is shifting from pure interest-rate dynamics to broader assessments of US fiscal conditions and the long-term credibility of the dollar, adding complexity to the outlook for gold prices.

**Technical Levels and Institutional Views**

From a technical perspective, the $4,600 level now serves as key near-term support. Some market participants note that if upcoming inflation data comes in stronger than expected, the dollar and Treasury yields could rebound in tandem, potentially driving gold to test $4,600 or lower support levels. Conversely, any signs of easing price pressures could allow gold to rebuild momentum and challenge recent highs. TD Securities analysts also highlighted that structural factors, including the US Treasury's long-term buyback program, will continue to provide underlying support for the precious metals market.