Press Release
29 May 2026
PCE Inflation Comes in Above Expectations, Reinforcing the “No Cut” Narrative
The US Bureau of Economic Analysis released the PCE Price Index yesterday, confirming concerns over persistent inflationary pressures. April’s Headline PCE climbed to 3.8% year-on-year, with a monthly increase of 0.4%. Core PCE, which strips out volatile food and energy components, edged up to 3.3% from a prior reading of 3.2%, whilst the monthly figure softened marginally to 0.2%. This stronger backdrop lends firm support to the Federal Reserve’s hawkish position, effectively extinguishing near-term prospects for monetary easing and cementing the “higher for longer” narrative.
US Dollar Outlook: Pronounced Reversal as Geopolitical Tensions Abate
Despite hotter inflation data providing fundamental support, the US Dollar staged a sharp bearish reversal. Markets had already substantially priced in an elevated PCE reading, giving rise to a textbook “buy the rumour, sell the fact” dynamic. Furthermore, the United States and Iran have formally agreed to a 60-day Memorandum of Understanding (MOU), establishing a ceasefire framework to facilitate negotiations. This meaningful de-escalation aggressively unwound safe-haven flows away from the greenback. Technically, the Dollar Index (USDX) encountered firm resistance at 99.35, breaking beneath the pivotal 99.00 handle, which could materialise into a broader bearish correction if sustained.
Gold Outlook: Bulls Recapture the 4,500 Level
The Dollar’s pullback provided a timely reprieve for Gold (XAUUSD). Having tested the key 4,360–4,400 support region — a level not seen in nearly two months—the precious metal mounted an impressive V-shaped recovery, reclaiming the psychological 4,500 mark. Should the 4,460–4,500 support band hold, it could open the door to further near-term upside consolidation.
Oil Outlook: Risk Premium Evaporates as Tensions Ease
The 60-day US-Iran ceasefire MOU is significantly bearish for crude oil. Brent Crude (UKOUSD) is testing its lower range, risking a negative monthly close. Any near-term technical recovery is unlikely to gain lasting traction; the prevailing strategy remains to sell rallies into resistance.
Market Outlook Summary
Friday’s trading session is digesting a hotter PCE print that has triggered a sharp Dollar sell-off. Fuelled by profit-taking and the US-Iran truce draining safe-haven demand, the Dollar Index has slipped below 99.00. Gold has mounted a strong recovery towards 4,500, whilst crude oil faces downside pressure as the geopolitical risk premium erodes.
Disclaimer
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