Gold rebounds above $1290 ahead of US inflation data
- 10-year US T-bond yield extends its recovery on Friday.
- US Dollar Index clings to gains above 97.
- Coming up: January PCE price index from the U.S.
The XAU/USD pair dropped to its lowest level in three weeks near $1286.60 earlier in the day but staged a recovery in the last couple of hour ahead of the critical data releases from the United States. As of writing, the pair was up $1.1 on the day at $1291.40.
Rising US T-bond yields coupled with broad USD strength yesterday weighed on the pair and caused it to fall below the critical $1300 handle to trigger a new wave of technical selling. With the 10-year T-bond yield adding more than 1% for the second straight day today, the pair extended its slide but investors seem to be moving to sidelines before the U.S. Bureau of Economic Analysis publishes the core annual PCE price index, the Fed's preferred gauge of inflation. Moreover, markets are waiting for the Parliamentary vote in the UK to see if there will be a shift in the market sentiment.
Ahead of the data, the US Dollar Index is clinging to modest gains near 97.20. The publication will include the personal spending and income figures as well. "Personal spending should have bounced back from December's large 0.5% contraction. We pencil in a 0.4% jump but see scope for a smaller increase. Personal income is also expected to have rebounded and advance 0.3% m/m in February,” TD Securities analysts argue.
Technical levels to consider