August 2026 PCE, the inflation gauge the Fed watches most closely, came in below expectations: core PCE eased to 3.0% year over year (3.3% expected) and headline to 3.4% (3.7% expected). Gold jumped to around $4,219, then gave it all back and now trades at $4,150 because GDP (2.2%) and ADP payrolls (90,000) were strong.
The data came out on Wednesday, September 30: ADP at 8:15 a.m. New York time and PCE and GDP at 8:30 a.m. ET (1:30 p.m. in London). Prices in this analysis are as of 2:00 p.m. ET.
Today's data: PCE, GDP and ADP
| Release | Actual | Forecast | Previous |
|---|---|---|---|
| Core PCE, m/m (August) | +0.2% | +0.3% | +0.2% |
| Core PCE, y/y | 3.0% | 3.3% | 3.3% (before revision) |
| Headline PCE, m/m | +0.3% | +0.4% | — |
| Headline PCE, y/y | 3.4% | 3.7% | 3.7% (before revision) |
| Consumer spending, m/m | +0.9% (real +0.6%) | — | — |
| Personal income, m/m | +0.2% | — | — |
| Saving rate | 4.1% | — | 4.6% |
| Q2 GDP (third estimate, annualized) | 2.2% | 1.5% | 1.5% |
| ADP private payrolls (September) | 90,000 | 41,000–70,000 | 36,000 (revised) |
| Chicago PMI (September) | 58.8 | — | — |
What does the August PCE say?
It says underlying inflation is cooling faster than the market feared. Core PCE, which strips out energy and food, rose 0.2% on the month and its annual rate dropped three tenths to 3.0%. Headline, with energy included, stands at 3.4%.
There is an important caveat: the release came with the annual update of the US national accounts, which also revised earlier months. So the drop from 3.3% to 3.0% is not only about August; part of it comes from past inflation turning out a bit lower than previously thought. Even so, it remains well above the Fed's 2% target. We explain the difference between PCE and CPI in our guide to US inflation.
What about GDP and jobs?
This is the other half of the story. Second-quarter GDP was revised from 1.5% to 2.2% annualized, on stronger investment, consumer spending and government spending; first-quarter growth was also raised to 2.5%. And consumer spending grew 0.9% in August, far more than income (+0.2%): households are dipping into savings, and the saving rate fell to 4.1%.
ADP confirmed the labor market is holding up: private employers added 90,000 jobs in September, the first acceleration since May, led by education and health (55,000). It is a solid preview for Friday's NFP.
Why did gold give back its gains?
Because the market read both sides of the report. In the first minutes, inflation dominated: the dollar fell, EUR/USD rose to 1.1374 and gold jumped to the $4,219 area. Then growth took over. An economy growing at 2.2% and households spending more than they earn do not force the Fed to cut, and bonds still pay a lot: the 10-year yield ends September near 5.24%.
The result is a draw that favors the dollar:
- The odds of a Fed hike on October 28 fell to about 35%, from 50% on Tuesday and 70% a week ago.
- But nobody expects cuts. With rates at 3.75–4.00% and inflation at 3%, the dollar's real yield is still high.
- Gold is closing a very bad September: the monthly loss is around 8%.
How the market reacted
| Asset | This morning (7:20 a.m. ET) | Now (2:00 p.m. ET) | Reading |
|---|---|---|---|
| Gold (XAU/USD) | 4,185 | 4,150 | Spiked to the 4,219 area and lost the 4,177 pivot |
| EUR/USD | 1.1358 | 1.1335 | Hit 1.1374 and slipped back to the bottom of the range |
| US Dollar Index | 101.20 | 101.40 | Bounced from 101.15 after the data |
| S&P 500 | — | 7,705 | Higher: the Nasdaq is up around 1% |
| USD/MXN | — | 18.07 | Rejected at 18.15; the peso remains weak |
Key levels and scenarios
Gold (XAU/USD)
| Level | Price (USD) | Why it matters |
|---|---|---|
| Resistance 2 | 4,180 – 4,185 | Session average price and yesterday's high, rejected twice today |
| Resistance 1 | 4,166 – 4,177 | This morning's bearish gap and the latest daily ceiling |
| Price | 4,150 | — |
| Support 1 | 4,138 – 4,149 | Yesterday's bullish order block and the lower daily Bollinger band |
| Support 2 | 4,099 – 4,111 | Monday's low and the 4-hour floor |
- Bearish: a 4-hour close below 4,138 would open 4,099–4,111, Monday's low.
- Bullish: reclaiming 4,177 on a 1-hour close would bring price back to 4,185 and, above that, to the 4,219 area.
- Bearish scenario invalidated: daily close above 4,185.
EUR/USD
| Level | Price | Why it matters |
|---|---|---|
| Resistance 2 | 1.1357 – 1.1374 | Top of the 24-hour value area and post-PCE high |
| Resistance 1 | 1.1341 – 1.1350 | Afternoon bearish gap and session average price |
| Price | 1.1335 | — |
| Support 1 | 1.1324 | Latest floor on the daily chart |
| Support 2 | 1.1300 – 1.1312 | Round number and 4-hour floor |
- Bearish: losing 1.1324 on a 4-hour close targets 1.1300; the lower daily Bollinger band sits at 1.1290.
- Bullish: the daily chart is deeply oversold (RSI 24). Breaking above 1.1350 would allow a return to 1.1374.
- Bearish scenario invalidated: daily close above 1.1374.
Levels are updated every morning in gold price today and EUR/USD today.
What's next
On Thursday we get initial jobless claims (8:30 a.m. ET, forecast 192,000), the ISM manufacturing index (10:00 a.m., forecast 56.0) and two speeches by Christine Lagarde (ECB). On Friday, the September NFP at 8:30 a.m. After a 90,000 ADP print, a strong NFP would support the dollar; a weak one would add to today's PCE and give gold some room. All times are in the economic calendar today and in our guide to trading the NFP.
Frequently asked questions
What is PCE and why does the Fed watch it?
It is the price index for US household spending, published monthly by the Bureau of Economic Analysis. The Fed uses it for its 2% inflation target, especially the core version that excludes energy and food. That is why it moves the dollar, gold and stock indices.
What was the August 2026 PCE?
Headline PCE rose 0.3% on the month and 3.4% on the year; core rose 0.2% and 3.0%. All four figures came in one tenth or more below forecasts. It was released on September 30, 2026 at 8:30 a.m. New York time.
Why didn't gold rally if inflation fell?
It did, but only for a few minutes. GDP revised to 2.2%, strong consumer spending and a 90,000 ADP print showed a solid economy that does not need rate cuts. With the 10-year yield near 5.24%, the dollar regained ground and gold fell back to 4,150.
Will the Fed hike rates in October?
It is now less likely: the market prices about a 35% chance of a hike on October 28, versus 70% a week ago. Friday's NFP and September CPI will be the data that decide it.
