Gold price trades sideways as investors await the Fed’s preferred inflation gauge.

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• Gold price trades sideways as investors await the Fed’s preferred inflation gauge.
• Upside risks to price pressures would allow the Fed to maintain a hawkish interest rate stance.
• The US economy is performing stellar on the grounds of consumer spending, labor market and economic growth.

Gold price (XAU/USD) remains stuck in a tight range as investors await the US Core Personal Consumption Expenditure – Price Index (PCE) for December, which will be published at 13:30 GMT. The core underlying inflation data will provide fresh clues as to whether the Federal Reserve (Fed) will stick to its restrictive interest rate stance in March or be poised to cut interest rates, a move that would be positive for non-yielding Gold.

Economic indicators such as consumer spending, labor market and the Gross Domestic Product (GDP) have remained robust, allowing Fed policymakers to advocate for higher interest rates at least for the first six months of 2024. The argument in favour of restrictive policy stance would strengthen if the underlying inflation turns out stubbornly high in today’s PCE data.

Gold price continues to trade sideways in a limited range as the broader focus is on the Fed’s interest rate policy, which will be announced next week. The precious metal struggles to sustain above the 50-day Exponential Moving Average (EMA), which trades around $2,015.00. Fresh downside would appear if the asset drops below the psychological support of $2,000. Momentum oscillators indicate a sharp decline in volatility.

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