Gold Rebounds Strongly From Its Lowest Level Since Late March, With the $4,500/oz Mark Back in Focus

Previously, gold had come under corrective pressure as the U.S. dollar and U.S. Treasury yields remained elevated, increasing the opportunity cost of holding a non-yielding asset such as gold. Market sentiment also turned more cautious ahead of a series of U.S. economic releases, particularly data related to inflation, growth, and consumption. As the Fed continues to emphasize a data-dependent approach, any signs that the U.S. economy remains resilient or that inflation remains persistent could delay expectations for policy easing.

However, the latest data set delivered signals that were not entirely negative for gold. The Core PCE Price Index m/m rose by only 0.2%, below the 0.3% forecast and the previous 0.3% reading. This is an important point because Core PCE is one of the inflation gauges closely monitored by the Fed. The softer-than-expected core inflation reading helped ease concerns that the Fed may need to adopt a more hawkish stance in the short term.

That said, gold’s reaction was not driven solely by the Core PCE data, but also reflected the market’s attempt to absorb several other U.S. economic indicators at the same time. Some indicators still suggested that the U.S. economy has not weakened significantly, meaning expectations for the Fed to maintain a cautious stance have not fully disappeared. As a result, gold initially remained under pressure from the U.S. dollar, Treasury yields, and technical selling.

The turning point came when prices failed to extend the decline further, indicating that selling pressure had weakened around a key support area. Against this backdrop, the lower-than-expected Core PCE reading helped ease pressure from a more hawkish Fed outlook, triggering short-covering activity and renewed dip-buying demand. The combination of technical factors and a reassessment of macro expectations helped gold recover strongly back toward the $4,500/oz area.

In addition, geopolitical risks, oil price volatility, and concerns over energy-driven inflation remain underlying support factors for gold. These factors have prevented investors from fully moving away from safe-haven assets, especially as financial markets remain highly sensitive to signals from the Fed, the U.S. dollar, and U.S. Treasury yields.

Overall, although the softer-than-expected Core PCE reading has helped reduce pressure from a more hawkish Fed scenario, gold’s outlook still needs further confirmation from the next moves in the U.S. dollar, Treasury yields, and Fed communication. In the short term, whether gold can hold above the $4,500/oz area will determine whether the recovery can extend further or remain only a rebound after a sharp sell-off.