Gold price chart analysis: will a breakout happen this week?

Now, all eyes turn to Friday’s US core PCE inflation report—a key macro event that could determine whether gold stays locked in a range or finds the catalyst for a breakout. With uncertainty surrounding Federal Reserve policy, geopolitical developments, and fiscal gold demand, the stakes are high.

Key levels to watch: the battle between $2,880 and $2,940

From a technical standpoint, $2,880 and $2,940 have emerged as the key battlegrounds for gold. A decisive move above the regression channel could pave the way for another run higher, while sustained weakness below these levels could signal deeper downside risk.

But what’s driving this price action? Let’s break it down.

What’s holding gold back?

1. Easing geopolitical risk
   Reports of a ceasefire in the Middle East and progress in US-led negotiations for a Russia-Ukraine truce have removed some of the geopolitical risk premium that had been supporting gold. With uncertainty receding, demand for safe-haven assets is seeing some headwinds.
2. Cooling physical gold demand
   While COMEX futures inventories have been building for months, physical gold flows tell a different story. Gold has been moving from London to the US, and spreads between COMEX and LME gold have been narrowing, suggesting that physical demand is starting to wane.
3. Diminishing tariff-driven demand
   One of the key drivers of gold’s recent stockpile movements has been the rush to front-run potential US tariffs. But as this urgency fades, so too does a crucial source of demand, adding downside pressure to prices.

What could push gold higher?

1. Shifting US economic data and Fed policy
   Cracks are emerging in the US economic resilience narrative. The S&P Global US Services PMI has slipped into contraction for the first time since early 2023, while consumer confidence is deteriorating. The University of Michigan’s sentiment survey now shows long-term inflation expectations surging to 3.5%—the highest in nearly 30 years.
   In response, traders are pulling forward rate cut expectations from September to July. With real yields dipping back below 2%, the fundamental appeal of gold remains intact.
2. Lingering trade uncertainty
   Despite recent market fatigue over pricing in every tariff headline, Trump’s latest comments about pushing ahead with a 25% tariff on Canada and Mexico—along with investigations into Chinese corporate imports—are still keeping gold in demand.

The PCE inflation test: will gold break out?

With Friday’s US core PCE inflation report looming, the market is bracing for volatility. Expectations are for a year-on-year dip from 2.8% to 2.6%, but with CPI running hot, a surprise could send shockwaves through gold markets.

• If PCE inflation cools in line with expectations, it could reinforce bets on two 25-basis-point Fed rate cuts this year, weighing on the US dollar and boosting gold prices.
• If inflation remains sticky at 2.8% or higher, gold bulls may have another fight on their hands as the Fed could maintain a hawkish stance.

Bottom line: range-bound, but watch for triggers

Gold remains stuck in an elevated trading range, caught between conflicting forces. The Fed’s cautious approach to rate cuts, stubborn inflation, and geopolitical uncertainty continue to create a complex backdrop.

Tuesday’s sharp selloff was a stark reminder that the bears are still active, but without a clear catalyst, gold is likely to remain range-bound for now. However, with macro data, Fed expectations, and trade policies in play, the next major move may only be one headline away.

For traders, Friday’s PCE inflation report could be the tipping point. Will gold break out—or will the range hold?