• Spot gold rose 0.6% to $4,206.29 an ounce after U.S. PCE data.
  • The data fueled hopes of cooling inflation, weighing on the dollar and supporting bullion.
  • Investors are weighing the Fed’s path amid higher yields and safe-haven demand.

Gold Pushes Higher

Spot gold extended gains on Friday, climbing 0.6% to $4,206.29 an ounce, as traders digested the latest U.S. personal consumption expenditures (PCE) report. The data, a key inflation gauge for the Federal Reserve, showed signs of easing price pressures, prompting a softer dollar and boosting the appeal of the precious metal.

The move came after a volatile session in which gold initially dipped but quickly reversed course. According to people familiar with the matter, the PCE figures came in slightly below expectations, reinforcing bets that the central bank may be nearing the end of its rate-hiking cycle. While yields remain elevated, the prospect of cooling inflation has shifted sentiment in favor of non-yielding assets like gold.

Market Dynamics

Gold’s rally also reflects broader uncertainty about the economic outlook. With geopolitical tensions simmering and equity markets jittery, investors have sought refuge in safe-haven assets. “The market is pricing in a more dovish Fed, and that’s providing a tailwind for gold,” said a strategist at a major commodities brokerage, who asked not to be identified. “But we’re also seeing physical demand holding up, especially from central banks and Asian retail buyers.”

Friday’s move puts gold on track for a weekly gain of nearly 2%, its best performance in a month. The metal has now recovered most of its losses from earlier in the quarter, when rising real yields and a stronger dollar had weighed on prices. Analysts at several banks have revised their gold forecasts upward, citing persistent inflation risks and the potential for a policy pivot.

Still, not everyone is convinced the rally has legs. Some traders pointed out that the PCE report, while softer, did not signal a dramatic shift in the inflation trend. “One data point doesn’t make a trend,” noted a portfolio manager at a European asset manager. “The Fed will need to see more consistent evidence before changing course.”

Trading volumes were above average, with futures open interest rising, suggesting new money entering the market. The SPDR Gold Shares ETF, the largest gold-backed exchange-traded fund, saw inflows of $120 million on Thursday, its largest daily addition in three weeks.

Efforts to reach the Fed for comment were unsuccessful. The central bank has repeatedly stressed that its decisions will be data-dependent.

As the session wore on, gold held near its highs, with traders now eyeing next week’s inflation and employment data for further direction. For now, the metal’s safe-haven allure remains intact, even as yields hover near multi-year peaks.

Correction: An earlier version of this article misstated the daily gain. It was 0.6%, not 0.8%. The article has been updated.