Gold prices rebounded above the psychologically important $4,000 level on Thursday after the latest US inflation report broadly matched market expectations.
The precious metal had fallen below $4,000 during the previous session and moved close to its lowest level since November 2025.
Spot gold rose 0.4% to $4,016.60 per ounce by 09:43 ET. Meanwhile, US gold futures gained 0.6% to trade at $4,032.22.
Core PCE Inflation Matches Market Forecasts
The Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures price index, showed that underlying price pressures remained elevated in May.
Core PCE inflation, which excludes food and energy prices, increased by 0.3% from the previous month. On an annual basis, it climbed 3.4%.
Both readings were in line with market expectations, although annual core inflation rose slightly from April.
Headline PCE inflation increased by 0.4% month over month and 4.1% year over year. Analysts had expected monthly growth of 0.5% and an annual increase of 4.1%.
The slightly softer monthly headline reading helped ease some concerns about further Federal Reserve interest rate increases.
US Dollar Retreat Supports Gold Prices
Gold also benefited from a modest pullback in the US dollar following the inflation report.
The dollar had recently climbed to its highest level in 13 months against a basket of major currencies. However, it weakened slightly after the PCE figures largely matched forecasts.
A stronger dollar normally makes gold more expensive for buyers using other currencies. Therefore, the dollar’s retreat helped improve demand for the precious metal.
The move also provided gold with some technical relief after its sharp decline below $4,000.
Federal Reserve Policy Remains a Key Risk
Despite Thursday’s recovery, expectations for tighter US monetary policy continue to create pressure on gold prices.
The Federal Reserve kept interest rates unchanged at its latest meeting. However, policymakers adopted a more hawkish tone and signaled growing support for stronger action against inflation.
Fed Chair Kevin Warsh emphasized the central bank’s commitment to restoring price stability. Markets are now considering the possibility of an interest rate increase in September, followed by additional hikes before the end of the year.
Higher interest rates usually weigh on gold because the metal does not generate interest or dividend income. Rising yields can therefore make bonds and other income-producing assets more attractive.
Gold Remains Well Below Its Annual High
Although gold climbed back above $4,000, it remains significantly below its 52-week high of $5,595.46.
The dollar has also shown early signs of stabilization after its initial post-inflation decline. As a result, the short-term direction of gold will likely remain closely linked to changes in Federal Reserve policy expectations.
ING analysts said gold’s recent weakness shows that investors are focusing less on safe-haven demand and more on the risks created by higher interest rates and tighter financial conditions.
Easing Geopolitical Risks Reduce Safe-Haven Demand
Lower geopolitical tensions have also weakened demand for gold as a defensive asset.
Progress in US-Iran peace negotiations and declining oil prices have reduced part of the risk premium that supported gold earlier this year.
Investors often purchase gold during periods of political instability, military conflict or financial uncertainty. Therefore, an improvement in geopolitical conditions can reduce demand for the metal.
Traders will now monitor upcoming inflation reports and Federal Reserve statements for further clues about the direction of monetary policy.
Silver and Platinum Remain Under Pressure
Other precious metals delivered mixed performances during Thursday’s session.
Silver traded near $56.91 per ounce after falling by more than 6% during the previous session.
ING analysts expect the silver market to remain in a supply deficit. However, they warned that some of the metal’s strongest sources of demand are becoming less supportive.
Platinum declined by 0.4% to $1,588.60 per ounce after dropping 4.5% on Wednesday.
Copper Prices Rebound
Copper prices moved higher as the broader metals market attempted to recover.
Benchmark copper futures on the London Metal Exchange rose by approximately 1.7% to $13,255.95 per metric ton.
US copper futures increased by around 1.6% to $6.04 per pound.
Investors will continue to assess inflation trends, interest rate expectations and global economic conditions when evaluating the outlook for gold and other major metals.
