Gold rebounds from six-month low as traders await US producer price data

Spot gold rose 0.5 percent to around $4,095 per ounce by early Thursday morning, recovering from a six-month low of $4,022.09 hit earlier in the session — its weakest level since 21 November — as investors covered short positions ahead of a closely watched US inflation release.

US gold futures for August delivery were down 0.4 percent at around $4,116 per ounce, reflecting residual caution in the paper market even as the spot price recovered.

The US Bureau of Labor Statistics was scheduled to release the Producer Price Index (PPI) for May 2026 at 08:30 Eastern Time (14:30 Tunisia time) on Thursday, one day after official consumer price data confirmed headline inflation had risen to 4.2 percent year-on-year in May — its highest level since April 2023 and in line with market expectations, according to the BLS Consumer Price Index release published on Wednesday 10 June.

Energy drove the headline move. The BLS data showed the energy index rose 3.9 percent in May on a monthly basis, accounting for over 60 percent of the total increase, with gasoline prices up 40.5 percent year-on-year. Annual core inflation, which strips out food and energy, came in at 2.9 percent — a new high since September 2025 — while the monthly core reading of 0.2 percent came in slightly below the 0.3 percent forecast.

Rate-hike odds weigh on metal

Gold's drop into six-month lows reflects a market recalibrating its interest-rate outlook. Gold is widely treated as a hedge against inflation, but higher interest rates weigh on the non-yielding metal by raising the opportunity cost of holding it.

Traders are now pricing in a more than 70 percent chance of at least one US rate hike by December 2026, according to the CME FedWatch tool. The Federal Reserve holds its next policy meeting on 16–17 June — the first chaired by Kevin Warsh — at which a new set of interest-rate projections will be published.

Matt Simpson, senior analyst at StoneX, noted that gold approaching the $4,000 mark represented an obvious technical support level that could prompt short-sellers to book profits or draw buyers back into the market.

Geopolitical pressure remains

Geopolitical tension added to the uncertain backdrop. The United States launched a fresh round of strikes against targets in Iran overnight on Wednesday, the US military said, with President Donald Trump warning of further action if no peace deal was reached. Iran declared the closure of the Strait of Hormuz in response, pushing oil prices more than $2 higher on Thursday.

The ongoing near-total closure of the Strait of Hormuz has disrupted energy flows from the Persian Gulf, fuelling the energy-driven inflation now running at a three-year high in the United States. Higher crude prices tend to accelerate consumer inflation — the same inflation that complicates the Federal Reserve's path and, by raising rate-hike expectations, presses on gold.

Other precious metals

Spot silver rose 0.4 percent to around $63.95 per ounce. Platinum gained 0.4 percent to $1,671 and palladium climbed 2.9 percent to $1,248.

The May PPI reading, due later Thursday, will be the next data point markets examine for signals on whether pipeline inflation pressures are building beyond the energy shock.