Gold eases, but set to extend record highs

Gold is easing slightly lower from its current intraday all-time high of $2685.90.

Still, the precious metal remains on course for a third-consecutive weekly gain, while its year-to-date advance stands at 29% at the time of writing.

The just-released (on Friday, September 27th) US PCE, personal income and spending data for August barely grew:

• Personal income: +0.2%
   
• Personal spending: +0.2%
   
• PCE price index month-on-month (August 2024 vs. July 2024): +0.1%
   
• PCE price index year-on-year (August 2024 vs. August 2023): +2.2%

Most of the above data points either matched or came in below market estimates.

The data did little to sway the debate about the size of the Fed's expected rate cut in November, prompting some slight profit-taking in spot gold.

Overall, the precious metal's surge towards $2700 has been fuelled by hopes that the Fed will have to cut rates more aggressively in Q4 and beyond.

In contrast to the 50-bps suggested by the latest FOMC dot plot, markets have almost fully priced in 75-bps in Fed rate cuts by Christmas.

Bullion may still have room to ease lower in a technical pullback, as key technical indicators are still flashing overbought conditions.

As seen in the chart above, gold's 14-day relative strength index (RSI) remains above the 70 threshold which marks "overbought" conditions.

Still, gold bulls should have little problems reaching $2700 by end-2024, and could see even stronger tailwinds towards $3000 if the window slams shut on a “soft landing” for the US economy.