Gold (XAU/USD) price collapses over 3% on Wednesday after the latest inflation report in the US showed prices remain elevated, reinforcing expectations that interest rates could remain higher-for-longer, a headwind for the non-yielding metal.
After Trump’s remarks, the US crude Oil benchmark, WTI, is up 2.62% to $91.00 per barrel.
As inflationary pressures build, US Treasury yields followed suit, with the 10-year T-note rising almost two basis points to 4.536%.
Traders' focus shifts to the May Producer Price Index (PPI) release, with both figures expected to rise modestly.
The Relative Strength Index (RSI) shifted into oversold territory, but it hasn’t reached the 20 level, considered the most extreme, which could trigger a consolidation in Gold prices.
Gold (XAU/USD) price collapses over 3% on Wednesday after the latest inflation report in the US showed prices remain elevated, reinforcing expectations that interest rates could remain higher-for-longer, a headwind for the non-yielding metal. The XAU/USD pair trades at $4,130 after testing two-month lows near $4,105.
XAU/USD sinks as hot CPI and retaliation fears hit bullion
Market mood shifted sour after US President Trump said that the US “will be attacking Iran hard” and that it has the right to resume attacks if Tehran doesn’t sign a deal. Meanwhile, Iran launched attacks on US bases established in the Gulf States, in Jordan, Kuwait and Bahrain.
US CPI above the 4% threshold, PPI up next
US inflation jumped to 4.2% YoY in May, its highest level in three years—aligned with estimates—, according to the Consumer Price Index (CPI), driven by energy prices, which rose 3.9%, up from April’s 3.8%. Underlying inflation, as reflected in the core CPI, came in at 2.9% YoY, as foreseen, up from 2.8% in the previous month.
After the data, money markets are still pricing in a Federal Reserve (Fed) rate hike towards the end of the year, yet expect 21 basis points (bps) of tightening, below the 25 bps hit on Monday.
Bullion is heading south, pressured by the recovery of Oil prices. After Trump’s remarks, the US crude Oil benchmark, WTI, is up 2.62% to $91.00 per barrel. As inflationary pressures build, US Treasury yields followed suit, with the 10-year T-note rising almost two basis points to 4.536%.
Traders' focus shifts to the May Producer Price Index (PPI) release, with both figures expected to rise modestly. Headline PPI is projected to hit 6.4% YoY, up from 6%, and Core PPI is foreseen to rise from 5.2% to 5.4% YoY. Furthermore, jobless claims are also expected to dip from 225K to 219K for the week ending June 6.
XAU/USD technical outlook: Gold tanks towards $4,100 as bears eye a YTD low
From a technical standpoint, Gold shifted bearishly, with sellers eyeing a clear break below the latest cycle low at $4,098, the March 23 yearly low. If broken, Bullion prices could collapse to $4,000, as the next area of interest from a supply/demand perspective would be the October 28, 2025, swing low at $3,886.
The Relative Strength Index (RSI) shifted into oversold territory, but it hasn’t reached the 20 level, considered the most extreme, which could trigger a consolidation in Gold prices.
For a bullish reversal, XAU/USD must climb above the 200-day Simple Moving Average (SMA) at $4,443, which opens the path to challenge $4,500.
Gold daily chart
