Gold Prices Rise Above $4,000 as Inflation Data and Weaker Dollar Boost Demand

Gold prices recovered on Thursday after falling to their lowest levels since November 2025, supported by a weaker U.S. dollar following the release of the latest U.S. inflation data. While easing concerns over aggressive Federal Reserve rate hikes lifted bullion, gains remained limited as oil prices climbed amid renewed geopolitical tensions in the Strait of Hormuz.

Spot gold advanced 0.7% to close at $4,026.78 per ounce, while U.S. gold futures gained 0.8% to settle at $4,041.60 per ounce. The precious metal benefited as the U.S. dollar ended its six-session winning streak after the May Personal Consumption Expenditures (PCE) report met market expectations.

The latest Core PCE Price Index, the Federal Reserve's preferred inflation gauge, increased 0.3% month-over-monthand 3.4% year-over-year, matching analyst forecasts. Meanwhile, headline PCE rose 0.4% monthly and 4.1% annually, slightly below expectations on a monthly basis. Although inflation remains well above the Fed's 2% target, investors viewed the report as a sign that inflationary pressures may be stabilizing.

The data eased fears that the Federal Reserve, led by Chair Kevin Warsh, would aggressively tighten monetary policy after its recent hawkish outlook. According to the CME FedWatch Tool, traders slightly reduced expectations for additional interest rate hikes while increasing bets that the central bank could keep rates unchanged. Lower interest rate expectations typically support gold prices because the metal does not generate interest income and becomes more attractive when the dollar weakens.

Despite the positive momentum for gold, rising crude oil prices capped further gains. The increase followed reports of another attack on a commercial vessel in the Strait of Hormuz near Oman. The United Kingdom Maritime Trade Operations confirmed that an unidentified projectile damaged a cargo ship, while reports indicated U.S. officials attributed the attack to Iran's Islamic Revolutionary Guard Corps.

The incident raised fresh concerns about shipping security in one of the world's most important energy corridors, even after the recent interim peace agreement between the United States and Iran helped restore tanker traffic. Although shipping activity has improved, renewed geopolitical risks pushed oil prices higher, creating uncertainty over future inflation trends.

Analysts believe that easing oil prices in recent weeks have reduced immediate inflation concerns, but persistent core inflation and ongoing labor market constraints could still influence future Federal Reserve decisions. Investors will continue monitoring economic data, interest rate expectations, geopolitical developments, and movements in the U.S. dollar for further direction in both the gold and broader commodities markets.