Gold stalls ahead of PCE data
Spot gold traded around $4,455 on Thursday, remaining flat after dropping more than 1% in the previous session. The precious metal found support near $4,450 as traders assessed competing forces: geopolitical risk from renewed Middle East tensions and the prospect of sustained high interest rates if inflation remains elevated.
The US economy is set to release its April Personal Consumption Expenditures (PCE) price index on Thursday, the Federal Reserve’s preferred inflation gauge. Economists forecast core PCE rose 0.3% for the month and 3.3% year-over-year, both the central bank’s 2% target.
US-Iran tensions drive oil higher
Fresh US military strikes in Iran have reignited concerns over potential disruptions to shipping through the Strait of Hormuz, pushing Brent crude above $96 per barrel. West Texas Intermediate futures climbed to $90.33 per barrel.
Higher energy prices feed directly into inflation concerns, potentially reinforcing the case for the Fed to keep rates elevated for longer. This dynamic creates a complex environment for gold, which typically benefits from both safe-haven demand during geopolitical crises and lower real interest rates.
Fed policy outlook remains hawkish
The Federal Reserve is widely expected to maintain its current interest rate stance at its upcoming policy meeting. UBS recently cut its year-end gold forecast by $400 to $5,500, citing persistent yield pressures and a stronger dollar.
Core PCE inflation has hovered near 3% for the past two years, with only modest decline expected in 2026 due to tariff effects and elevated oil prices. Goldman Sachs projects core PCE will remain near 3% throughout the year while overall inflation stays just below 4%.
