COMEX gold was trading at $4,204.40 per ounce, up $90.40 or 2.2% from the previous session, while COMEX silver jumped 4.3% to $66.77 per ounce. The gains followed a volatile week in which gold slipped to a more than six-month low before recovering, while silver remained supported by both safe-haven demand and its industrial-use outlook.
Despite Friday’s (June 12’s) rebound, gold was still on track to register a weekly decline as stronger-than-expected US inflation data tempered expectations of near-term monetary easing by the Federal Reserve.
Investor attention remained focused on the US economic outlook after producer prices rose more than expected in May. Higher energy costs, partly driven by tensions in the West Asia, contributed to the strongest annual increase in producer inflation in more than three years. The data reinforced concerns that inflation may remain elevated, potentially prompting the Federal Reserve to maintain a restrictive policy stance for longer.
Markets have consequently adjusted their expectations for interest rates, with traders pricing in a significant probability of an additional rate hike later this year. Elevated interest rates are generally negative for gold because the metal does not offer any yield, making fixed-income assets relatively more attractive.
However, bullion found support from lingering geopolitical risks. Investors continued to monitor developments involving the United States and Iran after US President Donald Trump said a peace agreement could be reached soon.
While hopes of a diplomatic resolution helped improve market sentiment, uncertainty persisted after Iran indicated that discussions were ongoing and no final decision had been made.
The prospect of reduced tensions could ease concerns over disruptions to energy shipments through the Strait of Hormuz, one of the world’s most important oil transit routes. Nevertheless, investors continued to retain exposure to safe-haven assets amid the uncertain geopolitical backdrop.
Market participants now await the preliminary University of Michigan consumer sentiment survey for further clues on inflation expectations and the Federal Reserve’s policy trajectory. Analysts expect precious metals to remain sensitive to incoming economic data, interest-rate expectations and geopolitical developments in the near term.
-With Reuters inputs
