Gold prices recovered on Thursday from their lowest level in six months, lifted by short-covering as investors positioned ahead of a key US inflation reading.
Spot gold was up 0.4% at $4,089.12 per ounce by 02:15 GMT, after earlier dropping to $4,022.09, its weakest since 21 November. US August gold futures moved in the opposite direction, slipping 0.5% to $4,111.10.
Matt Simpson, senior analyst at Stone X, said the $4,000 level is acting as clear support. “With prices charging toward $4,000, this represents an obvious support level that may prompt bears to book quick profits or tempt cautious bulls,” he said. He added that the dollar’s failure to rally meaningfully after Wednesday’s consumer price index report was also constructive for gold: “Unless there are nasty surprises in the producer price index, gold may see a near-term recovery.”
CPI data released Wednesday showed US consumer prices rose in May at their fastest pace in three years, driven by higher energy costs amid the conflict in the Middle East. Markets are now watching the May producer price index, due later Thursday, for further guidance on the Federal Reserve’s next move.
Gold’s traditional role as an inflation hedge is complicated by the rate outlook. Higher interest rates tend to weigh on the non-yielding metal, and CME FedWatch data shows traders now see more than a 70% probability of a US rate increase by December.
Geopolitical pressure also remained in the picture. The US military said Wednesday that American forces launched a new round of overnight strikes against multiple targets in Iran, following President Donald Trump’s warning that further attacks would follow if no peace agreement is reached. Iran subsequently announced the closure of the Strait of Hormuz, pushing oil prices up more than two dollars a barrel on Thursday.
Other precious metals also gained ground. Silver rose 0.3% to $63.86 per ounce, platinum added 0.6% to $1,673.75, and palladium climbed 2.2% to $1,239.89.
