Gold traded below the $4,700 per ounce level on Thursday, extending recent losses as stronger-than-expected U.S. inflation data reinforced expectations that the Federal Reserve will keep interest rates higher for longer.
The precious metal has fallen for two consecutive sessions, with investors reacting to fresh economic data showing U.S. wholesale inflation accelerating in April at its fastest pace since 2022. The increase was driven largely by higher energy and trade-related costs, partly linked to ongoing geopolitical tensions surrounding the Iran conflict.
Earlier data also showed U.S. consumer inflation rising to 3.8% in April, its highest level since May 2023. The combined inflation readings have significantly shifted market expectations, with traders now fully pricing out any rate cuts this year and increasingly betting on the possibility of another Fed rate hike before year-end.
Gold was last quoted at $4,694.95 per ounce, up slightly by 0.18% on the day, but still down nearly 2% over the past month. Despite the recent pullback, the metal remains up more than 45% year-on-year.
While gold is traditionally seen as a hedge against inflation, higher interest rates tend to weigh on non-yielding assets by increasing the opportunity cost of holding them.
Market attention is also turning to U.S.–China diplomatic engagement, with President Donald Trump’s visit to China under close watch for signals on trade relations and broader geopolitical developments, including tensions linked to the Iran situation.
