⚡ Gold drops to fresh two-month low as markets focus on inflation risks, US PCE data

Gold plunged to a fresh two-month low on Thursday, with XAU/USD dropping to $4,366 before trading around $4,386 as geopolitical tensions and inflation concerns weigh on the precious metal. The decline comes amid renewed attacks in the Middle East that are prolonging uncertainty around the US-Iran conflict, keeping traders on edge about escalation risks.

Markets are now pivoting their attention toward upcoming US Personal Consumption Expenditures data, the Federal Reserve’s preferred inflation gauge, which could significantly impact monetary policy expectations. The counterintuitive move lower in gold despite Middle East tensions suggests investors are prioritizing inflation fears and potential interest rate implications over traditional safe-haven demand. Traders and brokers are affected as positioning shifts away from the yellow metal, with flows potentially redirecting toward the dollar or inflation-hedged assets.

FXnCO Insight

Monitor upcoming PCE data closely as stronger-than-expected inflation readings could trigger further gold selloffs and dollar strength, while softer numbers may offer a near-term rebound opportunity in precious metals.

Source: FXStreet