Gold price (XAU/USD) fades the late Thursday’s corrective bounce off weekly low as it drops to $1,986 during early hours of Friday’s Asian session. In doing so, the precious metal keeps the previous day’s downside bias intact, mainly propelled though the United States growth, inflation and employment figures. However, upbeat performance of equities, led by tech giants’ earnings, join the anxiety ahead of the Fed’s preferred inflation gauge to prod the XAU/USD traders.

Gold Price lures bears on United States GDP’s upbeat details

Gold price justifies upbeat inflation signals from the United States data ahead of the next week’s Federal Open Market Committee (FOMC) monetary policy meeting.

On Thursday, the first readings of the US Gross Domestic Product (GDP) for the first quarter (Q1) of 2023, also known as Advance readings, marked mixed outcomes. That said, the headline US GDP Annualized eased to 1.1% from 2.0% expected and 2.6% prior but the GDP Price Index inched higher to 4.0% on an annualized basis from 3.9% prior and 3.8% market consensus. Further, the Personal Consumption Expenditure (PCE) Prices for Q1 rallied to 4.2% from 3.7% in previous readouts whereas the Core PCE figures also crossed 4.8% market forecasts and 4.4% prior with 4.9% mark for the said period. It should be noted that a slump in the weekly Initial Jobless Claims also allowed the US Dollar to remain firmer.

Following the data, the US Dollar Index (DXY) managed to print notable upside, of around 30 pips, before paring some of its gains but posting a daily positive close on Thursday. The same initially pushed the Gold price to prod the weekly low surrounding $1,984 before trimming the losses, retreating from $1,990 of late.

It should be noted, however, that the risk-on mood, mainly led by the strong United States technology giants’ earnings and mixed US data, allowed Wall Street to have the biggest daily gain in a week. The same also propelled US Treasury bond yields and put a floor under the Gold price. Though, US banking fallout fears regain momentum amid reports that the First Republic Bank (FRB) plans to sell half its loan book to fill a $100B deposit flight gap, which in turn weigh on the XAU/USD, together with the hawkish Federal Reserve bets.

Additionally weighing on the Gold price could be the likely deadlock over the US debt ceiling talks as most policymakers have contrasting views. Recently, House Speak Kevin McCarthy said, “I won't pass a clean debt-limit increase.”

Fed’s favorite inflation gauge, First Republic Bank-induced banking jitters eyed

Moving on, the Gold price are likely to remain pressured amid the recently hawkish Federal Reserve (Fed) concerns and market’s geopolitical fears, as well as due to banking FRB-led banking woes.

However, the quote’s further downside hinges on the Fed’s preferred inflation data, namely the US Core Personal Consumption Expenditure (PCE)  Price Index for March, expected to ease to 4.5% YoY versus 4.6% prior. Should the inflation clues arrive as softer, the Gold price may pare recent losses while justifying the risk-on mood. However, strong prints of the data can allow the Fed to delay policy pivot, which in turn can trigger the much-needed Gold price pullback.