#XAUUSD @ 1,991.56

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• Gold price makes minor gains as stickier inflation prompts the Federal Reserve to tighten.
• CME FedWatch Tool indicates the odds of a Fed rate hike at 83.1%.
• XAU/USD Price Analysis: To test the YTD high above $2009.75; otherwise, it could challenge the 50-day EMA.

Gold price registers minimal gains, as traders brace for the weekend, gains 0.16%% after data from the United States (US) showed that inflation remains at high levels, justifying the need for further tightening by the US Federal Reserve. After hitting a daily low of 1976.31, the XAU/USD is trading at $1992.93, up 0.28%.

US equities continued to climb. A report by the US Department of Commerce showed inflation in the United States had decelerated, with the Personal Consumption Expenditure (PCE) rate slowing from 5.1% to 4.2% in YoY readings. The monthly growth rate increased to 0.1%, below the prior month’s 0.3%. Despite this deceleration, the Fed’s preferred gauge for inflation, the core PCE, remained unchanged at 4.6% YoY, suggesting that inflationary pressures remain stickier than estimates. As a result, investors continued to believe that the Fed would raise rates.

That’s shown by the CME FedWatch Tool, with odds for a 25 bps increase at 83.1, lower than the previous day’s 83.9% chances.

Gold prices remained supported by falling US Treasury bond yields. As of writing, the 2-year Treasury bond yield drops 3.5 bps and yields 4.039%, while the 10-year benchmark note rate sits at 3.443% and collapses 8 bps.

In other data, the University of Michigan (UoM) Consumer Sentiment remained unchanged at 63.5, with inflation expectations for 1-year standing at 4.6% and a 5-year horizon at 3%.

During the week, XAU/USD faltered to break below/above the $1970-$2010 range, hovering on each side of the 20-day Exponential Moving Average (EMA) at $1989.35. Although the latter was broken four times weekly, the EMA turned flat, suggesting that sideways trading will continue in the XAU/USD.

If XAU/USD reclaims $2000, further upside is expected, and a challenge to March’s 20 high at $2009.75 in on the cards. A breach of it will expose the YTD high at $2048.79. Conversely, the XAU/USD first support would be $1970. A decisive break will expose the 50-day EMA at $1953.34.

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