Core PCE meets expectations but is met with indifference: Why does stable inflation push down gold and the dollar?

U.S. Q3 Core PCE Price Index Final Annualized Rate Released at 2.9%, Fully in Line with Market Expectations, No Change from Previous Quarter. Seemingly “In Line” Stable Data Has Triggered an Interesting Market Reaction—Gold and the US Dollar Weakened Instead. This Actually Reflects Subtle Changes in Market Sentiment: Eased Geopolitical Risks Combined with Stable Economic Data, Investors’ Safe-Haven Demand Significantly Declined.

What Does the Data Itself Indicate

Core PCE is a key inflation indicator closely watched by the Federal Reserve, directly anchoring the 2% long-term inflation target. The 2.9% reading means inflation remains above target but the pace has stabilized without signs of deterioration. This data clearly signals to the Fed: there’s no need to rush into rate hikes, nor to cut rates immediately.

According to reports, the market generally expects the Fed to keep rates unchanged at the January meeting. The in-line core PCE further confirms this expectation, alleviating concerns about a sudden worsening of inflation.

Why Did Gold Drop Instead

This is the interesting part. Gold has retreated from its historical high of 4887.82 USD/oz to 4796.75 USD/oz, down 0.8%. On the surface, this seems contrary to stable inflation data, but the underlying logic is clear:

Safe-haven demand has sharply declined

Trump made concessions on tariff threats and his remarks about “military annexation of Greenland,” withdrawing the threat to use tariffs as bargaining chips and explicitly ruling out military action. This shift significantly eased market concerns over geopolitical risks. ANZ Bank commodity strategist Soni Kumari directly stated that Trump’s change in stance is a key reason for the short-term correction in gold prices.

When safe-haven demand drops, gold, as a “panic asset,” loses its appeal. Investors shift from gold to risk assets, which is a normal market flow.

US Dollar Strengthening Suppresses Precious Metals

Meanwhile, the US dollar index has strengthened, directly pressuring dollar-denominated precious metals. The strong dollar and falling gold prices often go hand in hand.

What It Means for the Crypto Market

This is the part that the crypto community cares most about. According to analysis, the impact of core PCE data on the crypto market is twofold:

If Data Surpasses Expectations

It reinforces expectations of high interest rates, pushes back the Fed’s rate cut timetable, and suppresses risk assets like BTC and ETH. This will boost the dollar and attract funds into traditional finance.

If Data Falls Below Expectations

It signals a potential rate cut, prompting a rebound in crypto prices. This was the scenario markets worried about earlier, but tonight’s data did not show this.

Current Situation: In Line with Expectations

This indicates the market has already fully priced in the Fed’s policy path. Short-term, unlikely to see “black swan” directional shocks. Crypto market volatility will depend more on other factors—such as the easing of geopolitical risks and subsequent data like initial jobless claims.

What the Market Will Focus on Next

Although the core PCE met expectations, market attention has shifted to other economic data. Key indicators include the November PCE Price Index (non-core), Q3 real GDP final estimate, and weekly initial jobless claims. Especially, if initial claims unexpectedly rise, it will further signal a potential rate cut, which is bullish for cryptocurrencies.

Summary

The in-line core PCE is actually a “boring” good news—stable inflation means the Fed doesn’t need aggressive action. But the market’s real reaction is driven by easing geopolitical risks. The gold and dollar pullback reflects declining safe-haven demand, not economic deterioration. For crypto markets, this means the short-term direction depends on the continuation of risk sentiment, not just inflation data. Investors should closely monitor subsequent economic indicators and geopolitical developments to grasp the next market moves.