Despite meeting expectations, the rise in U.S. inflation failed to deter gold prices, which maintained their gains on Friday, showcasing resilience amidst easing geopolitical tensions. The safe-haven metal, trading 0.3% higher at $2,339.70 per ounce, braced for its worst week since December, following the de-escalation of the Middle East crisis. U.S. gold futures mirrored this upward trend, climbing 0.4% to $2,351.60, propelled partly by slipping U.S. Treasury yields, enhancing bullion's allure in comparison.
The U.S. personal consumption expenditures (PCE) price index, in line with forecasts with a 0.3% increase, reinforced expectations of the Federal Reserve postponing interest rate cuts until September. Tai Wong, a New York-based metals trader, interpreted the market's response as already factoring in the persistence of inflation. Wong envisioned a short-term consolidation phase for gold, hovering between $2,300 and $2,400, contingent on risk sentiment and buying activity from the Far East. Despite gold's traditional role as an inflation hedge, the prospect of higher interest rates could dampen its appeal, particularly as hawkish signals from the U.S. appear to have limited impact on gold prices recently. Commerzbank highlighted the potential for further declines in gold if expectations solidify regarding postponed interest rate adjustments. Meanwhile, China's report of nearly a 6% increase in gold consumption in the first quarter added another layer to the market dynamics