Can Gold Break Its Range as Fed Policy and Inflation Data Loom?

Spot gold (XAU/USD) hovered around $3,332 on Thursday, maintaining a tight range after briefly testing the $3,350 level earlier in the session. The metal’s lack of decisive movement comes despite significant U.S. dollar weakness and surging equities, as traders focus on the Federal Reserve’s next steps and the imminent release of May’s PCE inflation data.

President Trump’s renewed criticism of Fed Chair Jerome Powell and speculation about potential leadership changes at the central bank have added political uncertainty but have not provided the spark needed for a gold breakout. The market’s attention remains firmly fixed on macroeconomic fundamentals.

Will the May PCE Inflation Report Provide a Catalyst

Many people view the May Personal Consumption Expenditures (PCE) Price Index, which is due on Friday, as a crucial data point for gold. Economists expect the report to show stable monthly inflation but a marginally higher annual rate, reflecting persistent but controlled price pressures.

If the PCE reading exceeds expectations, it could reduce hopes for near-term Fed rate cuts and put downward pressure on gold prices.

Conversely, a softer inflation print would likely reinforce the case for monetary easing, potentially lifting gold out of its current range.

Traders anticipate heightened volatility around the data release, as the impact of recent tariffs has yet to fully reflect in consumer prices.

Did you know?
The current rangebound behavior of gold is reminiscent of early 2020, when the metal traded sideways for weeks before breaking out sharply as global uncertainty and policy shifts converged.

Technicals Point to Limited Downside and Range-Bound Trading

Technical analysis underscores gold’s current indecision. On the daily chart, XAU/USD faces resistance at $3,355.80 and support at $3,311.90. The metal is trading below its 20-day and 100-day Simple Moving Averages but remains comfortably above the 200-day average, signaling underlying bullishness.

Momentum and RSI indicators are neutral, lacking conviction for a sustained move in either direction.

Short-term charts confirm this picture, with gold repeatedly reverting higher after brief dips below its 200-SMA. Unless a major macroeconomic catalyst emerges, gold appears likely to remain range-bound in the near term.

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Mixed U.S. Data and Political Pressure Add to Uncertainty

Recent U.S. economic data has been mixed. Durable goods orders surged 16.4% in May, far exceeding forecasts and suggesting manufacturing resilience.

However, Q1 GDP was confirmed at -0.5%, and initial jobless claims rose by 236,000, both pointing to underlying economic headwinds.

President Trump’s public calls for lower interest rates and his criticism of Powell have fueled speculation about the Fed’s future direction but have yet to shift gold out of its comfort zone.

The interplay between economic signals and political rhetoric is keeping markets on edge, with gold traders hesitant to commit to a clear direction ahead of key data.

Market Focus Remains on Fed Policy and Summer Inflation Risks

Looking ahead, investors are closely watching for signs that the Fed will accelerate rate cuts in response to subdued inflation. The May PCE report is expected to be a key inflection point, but the real test for gold may come later this summer as the full impact of tariffs filters into consumer prices.

Until then, gold is likely to remain sensitive to shifts in Fed guidance and macroeconomic releases rather than external shocks or political drama.