A lower-than-expected PCE reading may contribute to a much anticipated rate cut. However, a stronger inflation reading could force the Fed to delay policy easing. The markets are pricing in a 74.3% probability of a September rate cut.

XAUUSD on a 4-hour chart has coiled into a pennant and is primed for a breakout.

Producer inflation fell 0.2% vs. 0.1% expected, fueling hopes that a rate cut may finally be on the horizon.

PCE reading (the Fed's preferred way of measuring inflation) could potentially influence the Fed's interest rate decision at the next meeting. Higher for longer interest rates could contribute to the rise of the US dollar, pushing the price of the zero-yielding metal lower.