Gold Rebounds After US PCE Data
Gold prices rebounded on Thursday (June 25th) after US inflation data was released in line with market expectations. The data eased some concerns about the possibility of an imminent Federal Reserve interest rate hike, putting downward pressure on the US dollar and Treasury yields.
Spot gold prices rose 0.7% to US$4,029.09 per troy ounce after previously falling as much as 1% earlier in the trading session. Meanwhile, US gold futures for August delivery rose 0.9% to US$4,045.20 per troy ounce.
David Meger, director of metals trading at High Ridge Futures, said the PCE data came out largely in line with expectations. He believes this is one reason why gold prices have moved more steadily in today's trading after experiencing pressure in recent sessions.
The US Personal Consumption Expenditures (PCE) price index rose 4.1% in the 12 months to May. This figure marked the largest increase and the first reading above 4% since April 2023. However, because the result matched economists' forecasts, the market considered the data insufficient to immediately raise concerns about more aggressive interest rate hikes.
After the inflation data was released, the US dollar erased gains and weakened. This made dollar-priced gold cheaper for foreign buyers. US Treasury yields also fell, reducing pressure on non-yielding gold.
According to CME FedWatch data, the market now rates an 80% chance of a December interest rate hike, down from 85% before the PCE data release. However, this probability is still significantly higher than before the Fed's policy statement last week, when the market only saw a 61% chance.
Pressure on gold previously increased after prices fell below the psychological level of US$4,000 per troy ounce on Wednesday, for the first time since November 2025. This weakening occurred as expectations of an interest rate hike increased after the Fed adopted a more hawkish policy tone.
Although gold is often considered a hedge against inflation, higher interest rates remain a significant pressure on the precious metal. When interest rates and yields rise, investors tend to shift to yield-bearing assets, such as government bonds, thus reducing gold's appeal.
On the other hand, oil prices fell to pre-war levels due to expectations of increased supply from the Middle East. The agreement to end the US-Israel war with Iran also reopened traffic through the Strait of Hormuz. This helped ease pressure on energy inflation, but the market remains wary of whether US core inflation will remain persistently high.
Other precious metals also strengthened. Spot silver prices rose around 2.2% to US$58.68 per troy ounce, following a weakening dollar and falling Treasury yields. Under these conditions, gold has the potential to continue its short-term recovery as long as the dollar and yields remain weak, although the risk of a Fed rate hike remains a major limiting factor.
Source: Newsmaker.id
