Gold Price Rebounds Above $3,200 as Easing Inflation Fuels Safe-Haven Demand

Gold prices surged on Thursday, reclaiming the key $3,200 level as a sharp drop in U.S. wholesale inflation and weakening consumer sentiment drove demand for safe-haven assets. The most active June gold futures contract rallied by $57.30, or 1.80%, to close at $3,233.67 after falling as low as $3,123 earlier in the day. The rebound follows Wednesday’s steep $70 loss and reflects renewed investor confidence in gold amid growing economic uncertainty.

PPI Report Signals Cooling Inflation

The rally in gold was largely driven by the U.S. Producer Price Index (PPI) report for April. According to the Bureau of Labor Statistics, wholesale prices increased by 2.4% year-over-year—a notable decline from March’s 3.4% figure and in line with market expectations. Core PPI, which excludes food and energy, rose by 3.1%, easing from 4% in March but slightly above the anticipated 3.0%.

This slowdown in inflation reduces pressure on the Federal Reserve to raise interest rates, making non-yielding assets like gold more attractive. The U.S. dollar index also weakened, down 0.22% to 100.675, adding further momentum to the gold rally.

Retail Sales Show Signs of Consumer Fatigue

The U.S. Commerce Department released weaker-than-expected retail sales data, with April figures up only 0.1%, a sharp drop from the 1.7% gain in March. This soft reading highlights a post-tariff slowdown, as consumers who previously front-loaded purchases are now cutting back amid growing financial pressures.

Consumer sentiment data further confirmed the shift. The University of Michigan’s sentiment index declined for the fourth consecutive month, plunging 8% in April. Expectations around personal finances and business conditions fell sharply, underscoring the fragile economic outlook.

Powell Warns of Prolonged Rate Environment

Federal Reserve Chairman Jerome Powell spoke at the Thomas Laubach Research Conference in Washington, signaling that longer-term interest rates may stay elevated due to economic shifts and supply-side risks. Powell warned of a potential era of more frequent and persistent supply shocks, which could lead to higher real interest rates and more inflation volatility.

These comments, combined with weakening macroeconomic data, suggest a challenging path ahead for the U.S. economy—an environment typically favorable for gold investors seeking portfolio protection.

Geopolitical Uncertainty Adds to Bullish Momentum

Ongoing tensions between Russia and Ukraine also bolstered gold’s appeal. Peace talks in Istanbul failed to produce progress, with Ukrainian President Zelenskyy criticizing Russia’s lack of commitment. Former U.S. President Donald Trump stated that resolving the conflict may require direct engagement with Russian President Vladimir Putin.

Gold Price Outlook: Bullish Momentum Likely to Persist

The combination of easing inflation, slowing consumer demand, Fed caution, and geopolitical instability has reignited bullish sentiment in the gold market. If these trends continue, gold could maintain upward momentum, with $3,250 as the next psychological resistance level and $3,300 potentially back in play.

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