XAU/USD: Gold Extends Slide to $2,890—Can US Inflation Data Reignite Upside Swing?

Fed’s preferred inflation measure coming Friday will show whether gold bugs are sitting in the right place or they can look for more risk.

📉 Gold Slides on Stronger Dollar

• Gold prices XAUUSD were trading lower Thursday morning with dealers and traders exchanging the precious metal at a 1.3% discount from yesterday’s levels. Earlier today, a troy ounce was going for around $2,880 to $2,890. A stronger dollar and rising Treasury yields pressured gold’s upside momentum.
• The US dollar recovered some of its losses after performing poorly for the bigger chunk of February after President Trump vowed to slap Europe with hefty 25% tariffs across all goods imported into the US.

💥 Tariff Jitters Rattle Markets

• Uncertainty loomed after Trump didn’t specify a clear timeline for imposing the said levies. Also, Canada and Mexico are in limbo with their deadline remaining blurry — Trump had imposed a 30-day moratorium on their tariff hikes but it’s likely that there will be delays on the actual kickoff date.
• Against this backdrop, Treasury yields rose with the 10-year rebounding from its weekly bottom. Gold is on the opposite side — the dip came as gold is a non-yielding asset and can’t compete with fixed-income instruments.

👀 Fed’s PCE Coming Friday

• Up next, markets are bracing for volatility in the leadup to the release of the Federal Reserve’s preferred inflation measure. The core personal consumption expenditures index (core PCE) is on deck for Friday and it’s expected to show price growth moderated a bit but still remained elevated.
• Fed officials, with Jay Powell as the top policymaker, are closely monitoring Trump’s decisions in the White House and are ready to counteract with appropriate measures if they see that inflation is spiraling out of control. Higher inflation typically creates more demand for gold, which is acting as a hedge against rising prices.