Gold Rises 0.9% After 6-Month Low
In Asian trading on Thursday, spot gold increased 0.9% to $4,107.57 per ounce by 21:25 ET (01:25 GMT), recovering from a session low of $4,023.96 per ounce, the weakest level since late November and a six‑month trough. The precious metal had slipped more than 4% in the previous session.
U.S. gold futures, however, fell 0.2% to $4,124.92 per ounce as market participants priced in the possibility of higher‑for‑longer U.S. interest rates. The U.S. Dollar Index remained largely flat in Asian hours, staying near a two‑month high reached earlier in the week.
The price movement occurred against a backdrop of escalating Middle‑East tensions. The United States launched fresh strikes on Iran overnight, prompting Iran to announce a halt to all vessel traffic through the Strait of Hormuz, a critical chokepoint for global energy shipments. The heightened geopolitical risk typically boosts demand for safe‑haven assets such as gold, but traders also focused on the inflationary impact of rising energy prices and the prospect of tighter U.S. monetary policy.
U.S. consumer price data released on Wednesday showed a 4.2% year‑over‑year increase in May, the fastest pace in three years, driven largely by higher energy costs. The CPI report reinforced expectations that the Federal Reserve will keep policy rates elevated for an extended period and could resume tightening later in the year if price pressures persist. Interest‑rate futures now imply a growing probability of at least one Fed rate hike before year‑end, a sharp shift from earlier expectations.
Higher interest rates raise the opportunity cost of holding non‑yielding assets such as gold and support the U.S. dollar, making bullion more expensive for overseas buyers. Investors are awaiting U.S. producer price data due later on Thursday for additional clues on inflation trends and the Fed’s policy trajectory.
Among other precious metals, silver rose 1.6% to $64.42 per ounce and platinum gained 1.1% to $1,685.60 per ounce.