Gold rebounds on weak US growth as Hormuz tension lingers

Spot gold rose 0.9% to around $4,495 per ounce on Thursday, buoyed by a downgrade in U.S. first‑quarter GDP and a softer dollar, even as geopolitical tension in the Strait of Hormuz kept markets cautious [1].

Key takeaways

• Spot gold up 0.89% to ~$4,495/oz; gold futures gained 1.14% to $4,499.30 [1]
• U.S. Q1 GDP revised to 1.6% annualised, down from 2.0%; core PCE inflation held at 3.3% YoY [1]
• Dollar index slipped 0.1% to 99.16; 10‑year Treasury yield hovered near 4.48% [1]
• Strait of Hormuz risk remains “two‑sided,” with cease‑fire hopes lowering oil prices but any flare‑up could lift crude and the dollar [1]
• Silver rose 1.35% to $75.53 per ounce, with technical resistance near $78.00 [1]

Economic data drives gold’s short‑term bounce

The market’s reaction to the revised GDP figure was swift. The 1.6% annualised growth rate, lower than the previously estimated 2.0%, signaled weaker economic momentum, while April’s personal consumption expenditures (PCE) inflation rose 0.4% month‑on‑month and 3.8% year‑on‑year. Core PCE, the Fed’s preferred gauge, increased 0.2% monthly and 3.3% annually, keeping inflation well above the Federal Reserve’s 2% target. This mix prompted traders to price a narrower path for monetary easing, easing pressure on yields and allowing gold to recover from its intraday low [1].

At the same time, the dollar index slipped marginally, and the benchmark 10‑year Treasury yield stayed near the 4.5% area, both of which traditionally support non‑yielding assets like gold. The combination of softer growth data and a modestly weaker dollar helped spot gold climb back toward the $4,500 level, while gold futures posted their largest one‑day gain since early May [1].

Hormuz tension adds a geopolitical overlay

The Strait of Hormuz, a narrow chokepoint for global oil shipments, remained the market’s primary geopolitical focus. A tentative 60‑day framework aimed at extending a cease‑fire and reopening the waterway without tolls is still under discussion, with no final approval. Recent skirmishes around the strait over the past 48 hours kept a risk premium embedded in oil, gold, and rates [1].

Analysts described the impact as “two‑sided”: optimism about a potential deal lowered oil prices, reducing inflation fears and supporting gold through lower yields and a softer dollar. Conversely, any renewed military exchange could lift crude prices, revive inflation expectations, and strengthen the dollar, which would weigh on gold and other non‑yielding metals [1]. Crude prices reflected this balance, with NYMEX WTI settling around $88.90 per barrel and Brent near $92.72 [1].

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