Gold Price Trend Forecast: Gold Price Risks Falling Below $4,000, PCE Data Is Key

TradingKey - As of the European session today (June 24), gold prices ( XAUUSD) remained weak and fell intraday, touching an intraday low of $4,050 to hit a near two-week low, signaling clear short-term bearish sentiment in the market. As of press time, gold was trading at $4,077.77, down 0.78% on the day.

Expectations for a Fed rate hike heat up significantly, and PCE may further amplify downward pressure on gold prices.

From a fundamental perspective, the Federal Reserve remains the primary source of pressure on gold's current performance. The Fed kept the target range for the federal funds rate unchanged at 3.50% to 3.75% last week, but the dot plot and officials' comments were distinctly hawkish. Newly appointed Fed Chair Warsh reinforced a policy orientation of "prioritizing price stability" after his first meeting, which the market interpreted as a sign that the Fed will not easily pivot to easing. A Reuters analysis pointed out that Warsh's concise, principle-based communication style, combined with his emphasis on the inflation target, amplified market speculation about future rate hikes and pushed bond yields higher.

Meanwhile, recent hawkish remarks from Fed officials have boosted the U.S. dollar and further weighed on gold. At his first FOMC press conference, newly appointed Fed Chair Warsh downplayed forward guidance and emphasized that the central bank would prioritize achieving price stability. Fed Governor Waller explicitly opposed recent discussions of rate cuts, advocating for the removal of the "easing bias" from the policy statement. According to the CME FedWatch Tool, the market's priced-in probability of a July rate hike has risen to 36% from 8.5% a week ago, while the probability of a September hike has climbed above 70%. For gold, this means short-term rallies will continue to be capped by the dollar and Treasury yields.

Fed interest rate expectations, Source: CME Group

From a market perspective, the U.S. Dollar Index has continued to strengthen after the Fed's June interest rate decision, reclaiming a solid footing above 101 and hitting a fresh near-one-year high. Behind the dollar's strength today is the investor belief that the U.S. economy remains resilient and that Fed officials' concerns over inflation have not yet faded.

Next, the market focus will shift to the U.S. May PCE price index to be released on Thursday. BEA data showed that the U.S. PCE rose 3.8% year-on-year in April, while the core PCE rose 3.3% year-on-year, with the next data scheduled for release on June 25. Since core PCE is the Fed's preferred inflation gauge, if the May core PCE remains around 3.3% or even beats market expectations on a month-on-month basis, it may further confirm that inflation remains sticky, putting greater downward pressure on gold.

Gold Price Analysis: Gold Prices Risk Falling Below $4,000, Sliding Toward $3,900

Gold price daily chart, Source: TradingView

Looking at the daily gold chart, prices dipped to near $4,000 on June 11 before starting a technical recovery, rebounding to a high of $4,382 on June 17. However, the price closed lower that day, indicating strong resistance at the key $4,360 level, which in turn dragged prices down. Today, gold slid to a low of $4,050, showing that overall market sentiment remains bearish.

Currently, the overall trend for gold remains biased to the downside. The immediate support level below is the June 11 low of $4,023.76. If this level fails to hold, gold will head lower to test the psychological level of $4,000. A further break below this point would open up downside potential toward $3,900. Conversely, if gold stabilizes above $4,000, it may rebound to test the resistance level at $4,360.