Gold trims losses after US inflation data, but down three days

Spot gold eased 0.6% to $4,428.69 an ounce on Thursday, trimming earlier losses but extending a three‑day decline as investors weighed April U.S. inflation data and renewed doubts over a U.S.–Iran deal [1]. The dip came after the personal consumption expenditures price index rose 3.8% year‑over‑year, matching expectations, and 0.4% month‑over‑month [1].

Key takeaways

• Spot gold fell 0.6% to $4,428.69/oz, while U.S. gold futures slipped 0.5% to $4,426.20/oz [1].
• The April PCE price index rose 3.8% YoY and 0.4% MoM, in line with forecasts [1].
• Analysts note that higher energy prices and a possible Fed rate hike could keep gold under pressure [1].
• Earlier in May, gold had rebounded from a one‑month low, rising 0.8% to $4,557.56/oz, driven by bargain hunting and easing oil prices [2].
• A separate Morningstar report shows gold futures up 3.3% to $4,719.30/troy ounce, highlighting divergent market signals [3].

Inflation data and Fed expectations shape gold’s short‑term path

The April personal consumption expenditures (PCE) index, the Fed’s preferred inflation gauge, posted a 3.8% increase over the prior year and a modest 0.4% rise from March to April [1]. That result left market participants uncertain about the Federal Reserve’s next move. Minutes from the Fed’s late‑April meeting revealed a growing number of officials open to raising rates if inflation remains sticky [1]. Higher rates typically diminish gold’s appeal because investors shift toward yield‑bearing assets [1].

TD Securities’ global head of commodity strategy, Bart Melek, suggested the data could give the Fed pause, potentially holding rates steady rather than tightening further [1]. However, he warned that even a cease‑fire in the Middle East might not be enough to lift gold, as lingering high energy prices could sustain inflation pressures [1]. City Index analyst Fawad Razaqzada added that “higher energy prices are once again feeding into inflation concerns, pushing Treasury yields modestly higher and strengthening the dollar,” which together weigh on bullion [1].

Context from earlier market moves and divergent futures data

A month earlier, gold had bounced from a low of $4,557.56 per ounce after a fragile truce in the Middle East, with analysts citing “bargain hunting” and easing oil prices as support [2]. That rebound was short‑lived, as the metal’s safe‑haven status was tempered by expectations that central banks would keep rates higher for longer [2]. The same analyst, Jim Wyckoff, noted that gold bulls would need a “significant fundamental spark” to regain momentum [2].

Adding to the mixed picture, a Morningstar commodities roundup reported gold futures up 3.3% to $4,719.30 per troy ounce [3]. This figure contrasts with the spot and futures prices reported by CNBC, indicating divergent trends across market segments and highlighting the volatility that can arise from differing data sources.

Why it matters

Gold’s price movements reflect the interplay between inflation metrics, Fed policy expectations, and geopolitical risk. The latest PCE data kept inflation expectations anchored, but the lingering uncertainty over a U.S.–Iran agreement and the prospect of higher energy‑driven inflation continue to pressure the metal. As long‑term investors watch for any shift in Fed stance or a resolution to Middle‑East tensions, gold is likely to remain volatile. Future releases, such as the upcoming U.S. employment report, will further test whether the Fed can maintain its current rate path or be forced to adjust, with direct implications for gold’s role as a hedge and safe‑haven asset.