Gold, PCE Data and Dollar Move
Investing.com reported that on Thursday, 25 June 2026, spot gold increased 0.7% to close at $4,026.78 per ounce, while gold futures rose 0.8% to $4,041.60 per ounce. The rally was driven by a weaker U.S. dollar after the release of the May core personal consumption expenditures (PCE) price index, which the market views as the Federal Reserve’s preferred inflation gauge.
May PCE Inflation Figures
The core PCE index rose 0.3% month‑on‑month and 3.4% year‑on‑year in May, exactly in line with consensus estimates and a slight increase from April. On a headline basis, the PCE index rose 0.4% month‑on‑month and 4.1% year‑on‑year, versus estimates of a 0.5% and 4.1% rise respectively. Both the headline and core year‑on‑year readings remain well above the Federal Reserve’s 2% inflation target and represent the highest levels since April 2023 (headline) and October 2023 (core).
Federal Reserve Reaction
Following the data, the Fed, now chaired by Kevin Warsh, signaled a more hawkish outlook than expected. The updated dot‑plot indicated that at least 50% of Federal Open Market Committee members anticipate rate hikes this year. Nevertheless, the CME FedWatch tool showed a marginal easing in market bets for Fed rate hikes and a slight uptick in expectations that rates would be held steady, reflecting the softening of immediate inflation concerns. The weaker dollar, a result of these expectations, further supported non‑yielding assets such as gold.
Oil Market and Strait of Hormuz Incident
Oil prices were capped by a rise after a new attack on a cargo vessel in the Strait of Hormuz. The United Kingdom Maritime Trade Operations (UKMTO) reported that an unknown projectile damaged the bridge of a Singapore‑flagged cargo ship near Oman, with no casualties. The Wall Street Journal later cited two senior U.S. officials confirming that Iran’s Islamic Revolutionary Guard Corps was responsible. The incident came after an interim peace deal between the United States and Iran earlier in the month, which had reopened the strait.
Kpler data showed confirmed vessel crossings doubling to 70 on Wednesday from the previous day, indicating a rapid rebound in traffic. Despite the earlier decline, Brent crude futures for September rose on Thursday, reflecting the market’s reaction to the renewed geopolitical tension.
Analyst Commentary
JPMorgan analysts led by Alex Gallin noted that the closure of the Strait of Hormuz had previously nudged global central banks toward a more hawkish stance as oil prices surged, but the quick drop in oil prices should moderate near‑term pressures. They added that growth risks are skewed to the upside amid elevated core inflation and constrained labor supply, while medium‑term pressures point toward more substantial tightening than currently projected. An unexpected shift toward higher interest rates, they warned, could trigger financial stress.
Publication Details
The article was authored by Anuron Mitra, with contributions from Ayushman Ojha and Jaiveer Shekhawat, published at 11:42 am IST on 25‑06‑2026 and updated at 03:14 am IST on 26‑06‑2026.