Gold Price Wavering Ahead of PCE Data – Ukraine Tensions Offer Comeback Opportunity

Ricardo Evangelista – Senior Analyst, ActivTrades

The gold price eased slightly in early trading on Wednesday and is currently just above the $4,200 mark. The precious metal is on a losing streak this week, having declined in every session so far.

This is due to gold bulls remaining cautious ahead of the release of key economic data, including Friday’s PCE inflation report. As the Federal Reserve’s preferred inflation gauge, the PCE reading is expected to influence expectations regarding the Fed’s interest rate path, which in turn will impact the US dollar and ultimately gold prices, given the inverse price correlation between the two assets.

Ukraine Tensions Increase Gold’s Appeal as a Safe Haven

Meanwhile, hopes for a swift resolution to the war in Ukraine have faded, and tensions are rising again, particularly after the Russian President’s recent threats of conflict with Europe. Against this backdrop, characterized by a declining outlook for the US dollar and renewed geopolitical instability that enhances gold’s appeal as a safe haven, a recovery in gold prices could occur.

Especially if upcoming economic data confirm a cooling US economy and stabilizing inflation. Such a scenario would likely lead to further weakness in the US dollar and renewed gains for gold.

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