Gold is trading in a narrow trading band, ahead of fresh US inflation data – Core PCE – today that may offer signs of when the Fed will pivot to commence its easing cycle.

Swaps traders are still pricing little prospects of the Fed lowering borrowing costs before June after recent data reaffirmed US exceptionalism (higher rates are historically negative for non-interest bearing bullion). The ETFs, however, have been cutting on the Gold holdings in the last 12 days, taking the total Gold held by ETFs down by 3.5% since the beginning of this year – the lowest level since January 2020.

Our view remains the same as we continue to believe that the short-term moves will remain tied to data potentially influencing Fed decision-making while downside to the price will be limited by robust support from the other two channels (supportive central bank demand and bullion’s role as the geopolitical hedge of last resort).