The Week Ahead: US PCE, Gold, UK CPI

With the central bank interest rate meetings behind us and earnings season winding down, we’re heading into a quieter week. The slower pace of economic and corporate data releases will give the market a much-needed breather before the news cycle cranks up again in April. That said, even in the relatively light week ahead, the market must still contend with the February reading of the US personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation, and the UK consumer price index (CPI).

US February PCE price index

Friday 28 March
The Fed’s favourite inflation gauge may be on the rise. Economists estimate that headline PCE increased 0.5% month-on-month and 2.7% year-on-year in February, up from the January readings of 0.3% and 2.5%, respectively. Meanwhile, core PCE – which excludes food and energy prices – is expected to have risen 0.4% month-on-month and 2.8% year-on-year, up from 0.3% and 2.6% in January. No wonder, then, that the Fed raised its inflation outlook for 2025 when it held interest rates at a target range of 4.25% to 4.5% on Wednesday.

If the PCE figures come in above or even in line with estimates, we may see some market volatility as traders and investors attempt to figure out how rising inflation might intersect with the Fed’s cautious stance on interest rates and the Trump administration’s apparent desire to slow economic growth in order to bring the cost of borrowing down.

Rising economic uncertainty is likely to continue to be felt in the stock market, particularly given the sharp declines already seen in the S&P 500. The index may have formed a bear flag pattern, as shown on the chart below, suggesting that the next major move could be lower. A break below 5,600 might signal the start of a deeper decline, with a drop below support near 5,500 potentially setting up a fall to 5,400. 

To the upside, the S&P 500 has struggled to break through key resistance levels at 5,700 and the 10-day exponential moving average. Until the index can overcome these hurdles – a challenging prospect – the next significant move for the index seems likely to be downward. Friday’s PCE inflation data could therefore be a source of nervousness for many market participants. 

Gold at a crossroads

Last week, gold hit the key $3,000 level and is now hovering just above it. This week will be critical in determining whether it can hold this new range or if a pullback is on the cards. The rally has been fuelled by ongoing global uncertainty, including escalating US tariff tensions, strong central bank gold buying, and persistent geopolitical risks such as the Russia-Ukraine conflict and shifting NATO dynamics. Macquarie analysts believe gold could climb to $3,500 by the third quarter if safe-haven demand continues. For now, the $3,000 level remains a battleground as investors watch key macro and geopolitical developments unfold.

UK February CPI

Wednesday 26 March
UK inflation’s descent from a 41-year high of 11.1% in October 2022 has stalled – and gone into reverse. Consumer prices increased 3% in the year to January, up from 2.5% in December, while core CPI – which removes volatile food and energy prices – rose 3.7% in January, up from 3.2% the previous month. Both measures of inflation have been edging higher since September. 

With inflation moving in the wrong direction, the Bank of England – which held interest rates at 4.5% on Thursday while warning of global trade uncertainty – may find rate cuts difficult to vote for in the near future. Analysts estimate that in February CPI remained stuck at 3%, well above the Bank of England’s 2% target while core CPI is thought to have eased slightly to 3.5%.

The Bank’s rate hold and talk of a gradual, cautious approach to cuts may have implications for the pound. GBP/USD is hovering around a key resistance level at $1.30 and, more importantly, has formed what appears to be a rising flag pattern on the technical chart, below. Historically, these patterns are consolidation formations, suggesting that either a significant move higher or lower may be imminent. A similar pattern formed in USD/JPY between 3 and 21 October, followed by a sharp rise in the currency pair. Although the timing of a breakout or breakdown is difficult to predict, GBP/USD could be a pair to watch following the release of the UK CPI figures. 

Key economic and company events

The coming week’s major economic announcements and scheduled US and UK company reports include:

Monday 24 March

• Eurozone, France, Germany, UK, US: March flash purchasing managers’ index (PMI) data
• Japan: Bank of Japan interest rate meeting minutes
• Results: No major scheduled earnings announcements

Tuesday 25 March

• Germany: March business sentiment index
• US: March consumer confidence index 
• Results: Bellway (HY), GameStop (Q4), Kingfisher (FY), McCormick & Company (Q1), Smiths Group (HY)

Wednesday 26 March

• Australia: February consumer price index (CPI)
• UK: February CPI
• Results: Chewy (Q4), Cintas (Q3), Dollar Tree (Q4), Jefferies Financial (Q1), Paychex (Q3)

Thursday 27 March

• Japan: March Tokyo CPI
• US: Q4 gross domestic product (GDP), weekly initial jobless claims to 21 March
• Results: Lululemon Athletica (Q4), Next (FY), TD Synnex (Q1)

Friday 28 March

• Eurozone: March business climate index, March consumer confidence index
• Germany: February unemployment rate
• US: February personal consumption expenditures (PCE) price index, March Michigan consumer sentiment index
• Results: No major scheduled earnings announcements

Note: While we check all dates carefully to ensure that they are correct at the time of writing, the above announcements are subject to change.