Gold prices slightly decreased during Thursday's midday trading session but remained higher than the daily low. The metal reached its lowest point in 3.5 months overnight. Positive economic data from the US, including higher US dollar index and increased US Treasury bond yields, have put pressure on gold. The August gold contract dropped $4.8 to $1,917.
Final US GDP and personal consumption data for the first quarter exceeded expectations. GDP growth was revised from 1.3% to 2.0%, while personal consumption increased from 3.8% to 4.2%. In contrast, US initial jobless claims decreased by 26,000 to 239,000, reaching the lowest level in 18 months and the largest decline in 2021. These figures align with the hawkish stance on US monetary policy, with proponents favoring a Federal Reserve interest rate hike.
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From a technical standpoint, the round number $1,900 is currently acting as immediate support, with overnight lows fluctuating around $1,893-$1,892. Further selling activity could confirm negative prospects and potentially push Gold prices down towards the challenging level of $1,840.
On the other hand, any positive move above the $1,913 level or an overnight high could face resistance near the $1,924-$1,925 range, before reaching the $1,936 area. Sustained strength above that could trigger a short-term rally towards the $1,962-$1,964 barrier, on the way to the supply zone of $1,970-$1,972.
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Friday, the U.S. Department of Commerce said its core Personal Consumption Expenditures price index increased 0.3% last month, compared to April's increase of 0.4%. The inflation rose in line with economists' expectations.
Meanwhile, inflation in the last 12 months rose 4.6%, down a tick from April's 4.7% increase. Annual inflation was slightly cooler than expected as economists forecasted an unchanged reading. However, looking at the broader trend, inflation remains stubbornly high, more than double the Federal Reserve's target of 2%.