Gold News: Gold Market Firms on Softer Fed Hike Odds, but Death Cross Warns Bears
The May PCE Price Index came in at 4.1% year over year, matching expectations. For a gold market that had been selling on every piece of data that confirmed the Fed’s hawkish stance, an in-line print was enough to stop the bleeding. The number did not justify easing. But it did not give the hawks fresh ammunition either and after four weeks of selling, gold traders took what they could get.
The September hike probability dropping from 64% to 59% is not a dramatic shift. But for a metal that has been trading inversely to rate expectations all year, five points in the right direction was enough to trigger the first meaningful short-covering rally since the selling started. The move from the weekly low at $3,959.08 to Friday’s settle at $4,088.39 was $129 in a few sessions. That is the kind of snap-back that happens when positioning gets stretched on one side and the data stops confirming the trade.
India Bought the Dip but China Did Not Show Up
Gold traded at a premium in India for the first time in about six weeks. The price correction from January’s record above $5,600 down to the $3,959 level brought Indian buyers back into the market. Lower prices attract physical demand in India and that buying provides a floor during selloffs even when the macro picture is working against the metal.
China was the other side of the story. Demand remained subdued from the world’s largest gold consumer. When India is buying and China is not, the physical support is real but one-sided. A full recovery in physical demand requires both markets participating. Friday’s rally was driven by the dollar and rate expectations. The physical bid from India helped but it was not the catalyst.
TD Securities noted that gold continues to trade inversely to both the dollar and oil prices. Lower crude supported gold this week by easing the inflation argument that has been powering the rate hike conversation. If oil turns back higher or the dollar recovers, that support goes with it.
The Weekly Picture Is Still Four Losses in a Row
Friday’s 1.53% gain does not change the structure. Four consecutive weekly losses and a 30% decline from the January high above $5,602.23 is not a pullback in a bull market. That is a repricing of the rate outlook. The Fed projected higher rates. Kashkari said he expects a hike this year. The dot plot showed nine of eighteen policymakers expecting tighter policy in 2026. Gold has been adjusting to that reality week by week and Friday’s bounce happened because the selling pace finally exceeded what the data justified.
