XAU/USD falls as US PCE inflation data fuels speculation of further Federal Reserve tightening.
Gold prices dropped to around $4,020 in early Asian trading Friday, extending losses after US PCE inflation data reinforced expectations of a Federal Reserve rate hike. The decline below $4,050 reflects traders pricing in tighter monetary policy, which typically weighs on non-yielding assets like gold.
Prior to the move, gold had traded near $4,050, but the latest inflation print shifted sentiment. Market consensus had anticipated a pause in rate hikes, though recent data suggests the Fed may maintain a hawkish stance. The Michigan Consumer Sentiment Index, due later Friday, could provide further direction.
The precious metal’s decline highlights sensitivity to US monetary policy expectations, with higher rates reducing its appeal as an inflation hedge.