Gold prices reversed course and edged higher on Thursday after a U.S. inflation reading was largely in line with expectations, easing some concerns about imminent Federal Reserve rate hikes and pushing the dollar and Treasury yields lower.
Spot gold was up 0.7% at $4,029.09 an ounce after falling as much as 1% earlier in the session. U.S. gold futures for August delivery rose 0.9% to $4,045.20 an ounce.
"PCE data looks like it came in line mostly with expectations. At this point, it's part of the reason why gold is relatively level-headed today," said David Meger, director of metals trading at High Ridge Futures.
The U.S. personal consumption expenditures price index surged 4.1% in the 12 months through May, the largest increase and first reading above 4.0% since April 2023. Economists polled by Reuters had forecast PCE inflation advancing 4.1%.
The U.S. dollar erased gains to turn lower after the data, making greenback-priced bullion cheaper for overseas merchants. Treasury yields also edged lower.
Markets see an 80% chance of a rate hike in December, compared with an 85% chance before the release of the PCE data and 61% chance before the Fed's policy statement last week, the CME FedWatch data showed.
"The main focal point will still remain inflationary pressures moving forward. That's some of the reason why we've seen gold deteriorate over the course of the last several sessions," Meger added.
Gold prices fell below the $4,000 an ounce mark on Wednesday for the first time since November 2025, pressured by ramped up expectations of higher interest rates this year after the U.S. Federal Reserve struck a hawkish tone at its policy meeting last week.
Despite being an inflation hedge, higher interest rates dampen bullion's appeal as investors turn to yield-bearing assets.
Meanwhile, oil prices fell to pre-war levels, as expectations of more supply from the Middle East outweighed demand concerns as an accord agreed last week to end the U.S.-Israeli war has allowed the resumption of traffic through the strait.
Spot silver added 2.2% to $58.68 per ounce and platinum climbed 1.8% to $1,606.09. Palladium rose 2.7% to $1,199.47.
