Gold Rebounds on Thursday

Gold traded above $4,000 per ounce on Thursday, rebounding from earlier losses as a weaker US dollar and lower Treasury yields provided support after the latest US PCE inflation report came in broadly in line with expectations. While inflation remains well above the Fed’s 2% target, the data eased concerns about a sharper-than-expected acceleration in price pressures. Meanwhile, oil prices continued to retreat and have now returned to levels seen before the outbreak of the Iran conflict, further alleviating inflation worries. As a result, traders pared back expectations for additional monetary tightening, with the probability of a Fed rate hike in September falling to 63% from 68% the previous day. Despite Thursday’s rebound, gold remains down roughly 5% year-to-date and nearly 20% below its January record high, reached before the escalation of the conflict involving Iran.

Gold weakened below $4,000 an ounce on Thursday, sliding toward its lowest levels in almost eight months as a stronger dollar and growing expectations of Federal Reserve rate hikes continued to weigh on prices. The US dollar rose to its highest level in more than a year against a basket of major currencies, making dollar-denominated commodities such as gold costlier for holders of other currencies. Last week, the Fed kept interest rates unchanged but signaled increasing support for tighter monetary policy, with Chair Kevin Warsh indicating his commitment to bringing inflation under control. Markets are now pricing in a possible rate hike in September, with additional increases potentially following before year-end. Those expectations have overshadowed the supportive effect of progress in US-Iran peace negotiations, which has driven oil prices back to pre-conflict levels and significantly reduced inflationary pressures.

Gold decreased below 4000, according to trading on a contract for difference (CFD).