Gold prices turned higher against a backdrop of cooling Fed rate hike speculation. The yellow metal rose as front-end US bond yields fell and year-end tightening expectations implied in Fed Funds futures moderated. The move played after PCE inflation data put the core price growth rate at 1.6 percent – in line with expectations and thereby offering nothing to propel bets on near-term stimulus withdrawal – while a measure of US consumer confidence unexpectedly declined.

Meanwhile, crude oil prices sank after UAE Oil Minister Suhail Mohammed Al Mazrouei said the market will “fix itself to a fair price for consumers and producers”, adding that the rules of supply and demand are working. The remarks pour cold water on the probability that OPEC will agree to an output freeze to buoy prices. Iraqi Oil Minister Adil Abdul-Mahdi suggested that such a policy will be discussed at the sit-down starting in Vienna on June 2.

Looking ahead, a busy day on the US data docket will continue to feed volatility in the Fed policy outlook. The ISM Manufacturing report and the central bank’s Beige Book survey of regional economic conditions take top billing. Upbeat results may stymie gold’s nascent recovery while downbeat outcomes are likely to prove supportive. The numbers’ US Dollar impact may translate into crude oil volatility as well considering prices are denominated in terms of the benchmark currency. OPEC-related headlines and the API set of weekly inventory numbers are also noteworthy.

GOLD TECHNICAL ANALYSIS – Gold prices may be preparing to rebound after breaking a nine-day losing streak and putting in a Bullish Engulfing candlestick pattern. A daily close above the 23.6% Fibonacci expansion at 1241.96 exposes support-turned-resistance at 1262.60. Alternatively, a move below the 38.2% level at 1203.82 targets the 50% Fib at 1172.99.