Again, the bullion failed to settle above the crucial 1,800 USD and traded weaker Friday, last seen at around 1,792 USD.
US GDP disappoints
Thursday, the third quarter US GDP was released, and it was the lowest since the Covid-collapse quarter of Q2 2020 when GDP crashed more than 30%. It came out at 2.0%, missing estimates of 2.6%, and it was a significant drop from the 6.7% final Q2 GDP number . The deceleration in real Q3 GDP was led by a slowdown in consumer spending, which dropped to 1.6% from 12.0%.
The US dollar declined after the data, but gold and silver failed to rally and remained muted on the day, with renewed selling hitting the metals today.
Later during the US session, the Fed’s favorite inflation gauge – PCE inflation indices – will be released. According to this measure, inflation is forecast to continue rising and should print 4.7% year-on-year, up from 4.3% in August. In addition, the core PCE index is expected to tick higher to 3.7%. Both numbers are well above the Fed’s 2% inflation target, prompting the central bank to start tapering its asset purchases.
The market currently prices more than two rate hikes in 2022 , but the Fed’s projections are not that hawkish.
Moreover, the employment cost index is due today, along with personal spending and income data. Lastly, the Chicago PMI index for October is on the agenda, forecast to slow from 64.7 to 63.5.
It looks like the US dollar is about to end its medium-term uptrend, despite rising yields and rate-hike expectations. The dollar index dropped below previous highs of 93.50 and is currently testing its 50-day moving average. The EURUSD pair also advanced to the same moving average. Should the dollar continue to decline, precious metals might be supported.
Daily chart seems neutral
Gold is having issues climbing above the last long-term bullish trend line , currently slightly above the 1,800 USD. Bulls need to push the metal above that level to confirm the medium-term bullish momentum. In that case, the critical resistance is still at 1,835 USD, and it needs to be cleared to the upside for the long-term uptrend to resume.
On the other hand, a nice rising wedge pattern is forming on the daily chart, which is a reversal formation . Should gold drop below 1,790 USD, the shape could become valid, targeting 1,750 USD in the initial wave.
If the rising wedge pattern becomes active, the 50-day moving average at 1,780 USD could offer some support.