The U.S. released the Core PCE Price Index for August, which is one of the most important tools the Federal Reserve uses to check inflation.

The report showed that inflation is moving in two directions:

• Month-on-Month (MoM): 0.2%, which is lower than the expected 0.3%.

• Year-on-Year (YoY): 2.9%, which is the same as forecast.

This means prices are rising more slowly in the short term, which is a positive sign for the Fed. But on a yearly basis, inflation is still above the Fed’s 2% target.

For the market, this data is very important. A weaker MoM number means the Fed may feel less pressure to raise interest rates again. That could make the U.S. dollar a little weaker in the short term. At the same time, lower inflation gives hope that the Fed may cut rates in the coming months. This is usually good news for stocks and gold. It also means bond yields could come down, which supports risk assets.

Looking at gold technically, the price is now moving around $3,753 and is forming a triangle pattern. If gold breaks above $3,775, it could quickly move toward $3,791–$3,800. But if it falls below $3,740, then the next support is around $3,712. This shows the market is waiting for a strong signal, and upcoming data like the NFP will play a key role in the next move.

In simple words, inflation is cooling but not yet at the Fed’s target. Traders should watch closely, because if the trend continues, a rate cut before the end of the year becomes more likely.

By Md Golam Rabbani