Key Takeaways:
Gold slipped to $3,985.81 an ounce on COMEX as energy-driven inflation concerns kept Federal Reserve rate hike expectations in play. The metal partially recovered to $4,060.41 as of 8:38 a.m. ET, up 0.19% from the prior day's close.
"Producer prices fell 0.3% in June, the biggest monthly drop since April 2025, but energy costs tied to Middle East tensions remain an upside risk," New York Fed President John Williams said, adding that inflation at around 4% remains "unquestionably too high."
The US producer price index rose 5.5% from a year earlier, slowing from 6% in May, according to Bureau of Labor Statistics data. Core producer prices, excluding food and energy, rose 0.2% month-on-month. Williams projected inflation would ease to about 3.25% by year-end and return to the Fed's 2% target by 2027-2028.
Higher rates increase the opportunity cost of holding non-yielding gold. The metal has fallen 5.78% over the past month and sits 27.4% below the January all-time high of $5,597.23. The next key event is the Fed's July 29-30 policy meeting, where markets will watch for any shift in the rate path.
The energy-inflation link has become the dominant driver of gold price action. US strikes on Iran-backed targets in the Strait of Hormuz this week pushed crude benchmarks higher, feeding through to producer price categories. The Fed's Beige Book, released Wednesday, noted that prices continued to rise at a moderate rate "driven in part by Middle East tensions and tariffs."
Gold's intraday slide below $4,000 came despite a broadly weaker US dollar, which typically supports the precious metal. The breakdown of the traditional inverse correlation shows how deeply rate expectations are driving the complex.
The decline mirrors weakness across the precious metals complex. Silver extended its losing streak in the Delhi bullion market, according to local traders, while copper edged lower on the LME after weaker-than-expected Chinese GDP data raised demand concerns.
The $4,000 level represents the nearest support, with a sustained break below opening the path toward the 52-week low of $3,283. On the upside, resistance sits at $4,150.
This article is for informational purposes only and does not constitute investment advice.
