After a consolidation phase at around $1,950 in the second half of the week, XAU/USD faced further downside pressure on Friday and ended up falling almost 2% on a weekly basis. Bulls should stay on the sidelines ahead of key data from the US, reports FXStreet’s Eren Sengezer.
Gold Volatility May Rise on US Q1 GDP and March PCE Inflation Data
“Markets expect the U.S. economy to expand at a 1% annualized rate in the first quarter following the 6.9% growth recorded in the fourth quarter of 2021. In case the GDP reading beats forecast Analysts said this would confirm the Fed’s view that the economy will be able to handle aggressive tightening. On the other hand, a disappointing GDP print could lead to loss of interest in the dollar and open the door for a XAU/USD rally.
“April inflation data from the Eurozone will be watched closely by market participants on Friday. A warmer than expected inflation reading could fuel a EUR/USD rally. In such a scenario, the selling pressure surrounding the dollar should help gold higher.
“The U.S. Bureau of Economic Analysis will release the Personal Consumer Expenditure (PCE) price index on Friday, the Fed’s preferred gauge of inflation. The core PCE price index is expected to decline to 5.3% on an annual basis in March, compared to 5.4% in February A weak PCE inflation figure should weigh on the dollar, supporting gold, and vice versa for a stronger result.