Gold Price Forecast: Gold Price Falls Below $4,000, PCE Data May Push Gold Down to $3,900

TradingKey - As of today (June 25) during the Asian session, gold ( XAUUSD) was last priced at $3,976.90, down 0.54% on the day. After gold prices fell below $4,000 yesterday, they fluctuated around $3,980 today, indicating that the market is waiting for further catalyst signals to determine the short-term direction. Notably, the U.S. May PCE data is scheduled to be released today.

Expectations of Fed rate hikes continue to weigh on gold prices; focus on PCE data for today's short-term direction.

From a fundamental perspective, the core reason for the recent continuous weakness in gold prices is that expectations of Federal Reserve rate hikes have continued to heat up, providing sustained support for the US dollar to strengthen further, which has exerted heavy pressure on gold prices. Since the Fed kept interest rates unchanged at its June meeting but struck a clearly hawkish tone, the US Dollar Index has risen continuously from 99.50 to its current peak of 101.80, an increase of 2.3%. This has significantly increased the investment cost of dollar-denominated gold, thereby driving gold prices downward.

From a technical perspective, gold, as anticipated in yesterday's analysis article, [Gold Price Forecast: Gold Risks Falling Below $4,000, PCE Data Holds the Key] has successfully broken below $4,000. As an important round-number level and a key psychological barrier for bulls, the loss of this level yesterday has significantly dented market bullish confidence.

In the short term, market focus is centered on the May PCE data to be released today, which will determine gold's short-term direction. Market expectations indicate that the headline PCE in May may rise by 0.5% month-on-month and to 4.1% year-on-year, while core PCE may rise by 0.3% month-on-month and to 3.4% year-on-year. If the data meets or exceeds expectations, it will reinforce the narrative that 'inflation remains sticky and the Fed still needs to maintain high interest rates,' and gold may continue to face short-term pressure.

Gold Price Trend Analysis: Gold May Retreat Further Toward $3,900

Gold Price Daily Chart, Source: TradingView

Looking at gold's daily chart, although intraday prices briefly fell below $4,000 yesterday, there was no rapid sell-off typically seen after a key support level is breached. On the contrary, gold rebounded to $4,042 during the session, indicating that dip-buying support remains intact. Furthermore, yesterday's close of $3,999.3 was just shy of the $4,000 threshold, suggesting that bulls have not yet given up.

At present, if today's PCE data release turns out to be bearish, downward momentum for gold prices could be significantly bolstered, dragging prices further down to extend the bearish trend toward $3,900. Conversely, if the PCE data is bullish for gold, dip-buying could trigger a technical recovery and rebound.

On the downside, the primary target for gold is $3,900. If this support is lost, it could open up deeper downside toward $3,500. On the upside, if gold manages to close above $4,000 today, prices could rebound to test the resistance at $4,121, and potentially $4,360 further up.