Gold (XAU/USD) rebounded from a six-month low, turning positive on Thursday with a 0.58% gain, trading at $4,091 after previously hitting $4,023. This recovery was driven by renewed haven demand as hostilities between the US and Iran intensified. US President Donald Trump threatened further action against Iran, including the possible seizure of Kharg Island, while Iran responded with attacks on US military bases in the Gulf region and issued warnings of a 'decisive, crushing, painful, and regretful response' to any US action or threat [1].
US economic data contributed to market volatility. Producer Price Index (PPI) inflation rose by 6.5% year-over-year in May, surpassing April's 5.7% and forecasts of 6.4%. The core PPI, excluding energy and food, expanded by 4.9% year-over-year, which was below the consensus of 5.4% and unchanged from April. Initial Jobless Claims for the week ending June 6 increased to 229,000, exceeding analyst expectations of 219,000 [1]. These figures, alongside the Consumer Price Index (CPI) released earlier, have maintained investor expectations for a Federal Reserve rate hike towards the end of 2026, according to Prime Terminal data [1].
Despite the rebound, gold's advance has been limited by speculation that major central banks may raise interest rates amid the ongoing energy crisis. The US Dollar Index (DXY) rose 0.20% to 100.28, supported by oil price recovery, which has acted as a headwind for gold [1]. Technical analysis indicates that gold remains bearish, consolidating below $4,100, with sellers targeting the $4,000 level. The Relative Strength Index (RSI) is oversold but not at extreme levels, suggesting the downtrend could persist. If gold falls below $4,000, the next major support is the October 28, 2025 swing low at $3,886. To reverse the trend, XAU/USD would need to reclaim the 200-day Simple Moving Average at $4,443 and aim for $4,500 [1].
Looking ahead, the US economic calendar will feature the preliminary University of Michigan Consumer Sentiment for June and the Federal Reserve's monetary policy update, which could further influence gold prices [1].
CONCLUSION
Gold's rebound from a six-month low was driven by geopolitical tensions and strong US inflation data, but its gains remain capped by central bank rate hike speculation and US Dollar strength. Technical indicators suggest further downside risk unless key resistance levels are reclaimed. Investors will be watching upcoming US economic releases and Fed policy for additional market direction.