Gold edged higher on Wednesday but remained on pace for a monthly decline, with investors holding their breath ahead of a major U.S. inflation report that could shape the Federal Reserve's next policy move. At the center of attention is the core personal consumption expenditures (PCE) price index, the central bank's preferred inflation gauge.

Spot gold rose 0.1% to $4,187.64 an ounce, according to Investing.com, while gold futures gained about 1% to $4,219.30 an ounce, recovering some ground after recent weakness. Despite the daily gain, spot gold has fallen roughly 6% over the past month, putting it on track for one of its weaker monthly stretches this year.

Inflation Data in Focus

The release of the core PCE price index is the main event for traders this week. The inflation measure, which excludes volatile food and energy prices, is the one the Federal Reserve watches most closely, and the latest reading could help determine whether officials deliver another interest rate hike. The gauge is also the yardstick for the Fed's 2% inflation goal, spanning a broader basket of household spending than the better-known consumer price index.

Market watchers are also keeping a close eye on the metal's near-term trajectory. GLD — the ticker for SPDR Gold Shares — is one of the largest physically backed gold ETFs and a commonly watched barometer of investor positioning in bullion. On X, Barchart flagged what it called a “make or break moment” for the GLD gold ETF:

Gold $GLD – Make or Break Moment here 🚨 🚨 pic.twitter.com/Z1G7lOIeGW

— Barchart (@Barchart) September 29, 2026

Economists expect the core PCE reading for August to rise 0.3% month over month, up slightly from 0.2% in July. The overall PCE figure is forecast to climb 0.4% month over month, up from 0.2% the prior month. On a yearly basis, core PCE is projected at 3.3%, with the headline number seen at 3.7% — both matching July's pace and remaining well above the Fed's 2% target.

Higher inflation readings can complicate the Fed's policy plans. They can also affect how attractive gold looks to investors, since the metal does not pay interest or dividends.

The Federal Reserve raised interest rates by a quarter point earlier this month in a bid to slow rising prices across the economy. It remains unclear whether additional hikes will be needed this year. New York Fed President John Williams, whose post carries a permanent vote on the rate-setting committee, said this week that there is no immediate need to raise rates again in October, and his comments prompted traders to sharply lower the odds of an October increase. The probability fell to 42.6%, down from 70% earlier in the week, according to the CME FedWatch Tool.

Still, most Fed officials are not ready to pause. Of the 18 members of the Federal Open Market Committee, all but two called for at least one more rate hike this year.

Treasury Yields and Geopolitical Factors

Gold futures climbed more than 1% in early European trading as U.S. Treasury yields pulled back from multiyear highs. Lower yields tend to support gold prices, because they reduce the opportunity cost of holding an asset that generates no income.

Beyond interest rate policy, developments in the Middle East are also in focus. Qatar is mediating talks between Washington and Tehran that reportedly include discussion of reopening the Strait of Hormuz, a key route for global oil shipments. A breakthrough looks unlikely for now, however. President Donald Trump has denied reports that the United States offered Iran sanctions relief, while Iran continues to push for its own conditions.

Elevated oil prices add another layer of pressure on inflation, which in turn feeds concerns about further central bank tightening.

Traders are also looking ahead to Friday's U.S. payrolls report. Together with the PCE data, it will help shape expectations for the Fed's next interest rate decision.

This article originally appeared on CoinCentral.