Gold prices plunged 1.43% to near $4,390 during Thursday’s European session, hovering close to a fresh two-month low of $4,366.56 hit earlier in the day. The precious metal is facing intense selling pressure as traders position ahead of critical US PCE inflation data due for release. The unexpected dynamic sees gold weakening despite renewed Middle East tensions that have pushed oil prices higher, breaking the traditional safe-haven correlation that typically drives gold and crude in the same direction during geopolitical crises.
The price action suggests traders are prioritizing inflation concerns over geopolitical risk, with markets bracing for potential hawkish signals from the PCE data that could strengthen the dollar and further pressure gold. Brokers and institutional traders are closely monitoring support levels around the two-month low as volatility is expected to spike upon the data release.
FXnCO Insight
Gold’s failure to rally on Middle East tensions signals strong bearish sentiment; wait for PCE data before taking directional positions as volatility will likely surge on release.
Source: FXStreet