Gold has been gaining this week on a miss in the US JOLTS job openings print and a miss in the US consumer confidence print on Tuesday. A slowdown in the US job market aligns with the Federal Reserve’s objectives, indicating that the impact of interest rate hikes is beginning to cool the US economy. The miss in these two data points sent gold surging higher on Tuesday, as yields and the dollar fell.
Looking forward to Thursday’s PCE print, there is another potential for gold to find strong buyers. If the PCE print comes in below markets’ minimum expectations, we will likely see yields fall over again alongside the dollar. This in turn will lift gold. The Core PCE print is expected to come in at 4.2%, which is marginally higher than the prior reading of 4.1% for June. The headline print is expected to come in at 3.3% up from the previous of 3%. Remember, that the PCE inflation data is the Fed’s preferred measure of inflation, so the Fed will pay close attention to this data. See the data expectations below.
What to expect
The best opportunity for the likelihood of gold buying will come from a big miss in the data. What will constitute a miss? If we see the headline come in below 3% and the core reading below 4.1%, then that takes the pressure off the Federal Reserve to hike interest rates and should send yields and the dollar lower and gold higher. If we see a miss in the data as outlined above, this should also lift the EURUSD and, possibly, US stocks too. However, the market reaction can always surprise, so always keep that in mind.