Gold rebounds from six-month low as Trump threats rattle markets

Gold (XAU/USD) price trims some of its earlier losses, turning positive on Thursday, up by 0.58% as the resolution of the Middle East conflict seems far off amid US-Iran exchanges of fire, which could delay negotiations. The XAU/USD trades at $4,091 after reaching a six-month low of $4,023.

XAU/USD recovers as US-Iran escalation revives haven demand

During the overnight session, hostilities between Washington and Tehran continued, while US President Donald Trump vowed to continue the attacks on Iran, stating that he’s contemplating the seizure of Kharg Island. Iran attacked US military bases around the Gulf region and warned via the Chairman of the Parliament's National Security Commission that “Iran will give a decisive, crushing, painful, and regretful response to any action or threat,” according to Nour News reports.

US inflation data showed that prices on the produce side rose by 6.5% YoY in May, exceeding April’s 5.7% print and forecasts of 6.4%. Excluding energy and food items, the so-called core Producer Price Index (PPI) expanded by 4.9% YoY for the same period, below the consensus of 5.4% and unchanged compared to April’s.

Worth noting that the PPI report, along with the CPI revealed a day ago, kept investors' expectations for a rate increase by the Federal Reserve (Fed) towards the end of 2026, according to Prime Terminal data.

The US economic schedule also included job figures, with Initial Jobless Claims for the week ending June 6 rising by 229K, exceeding the 219K expected by analysts.

Bullion’s advance has been capped by speculation that major central banks will raise interest rates amid the energy crisis. Also, overall US Dollar strength, underpinned by the recovery of Oil prices, is a headwind for Gold.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of currencies, is up 0.20% at 100.28.

Ahead in the week, the US economic docket will feature the release of the University of Michigan Consumer Sentiment for June on its preliminary reading, ahead of the Federal Reserve's monetary policy

XAU/USD technical outlook: Gold consolidates below $4,100, sellers eye $4,000

Gold has shifted bearish after reaching a six-month low of $4,023, with sellers driving the price below the previous low of $4,098, opening the door to further downside. Momentum favors further downside, as indicated by the Relative Strength Index (RSI), which is oversold yet shy of the most extreme level below the 20 area. Hence, the downtrend remains intact, and further losses are expected.

If bullion prices plummet below $4,000, the next significant support level from supply and demand dynamics is the October 28, 2025, swing low at $3,886.

Upwards, XAU/USD must reclaim the 200-day Simple Moving Average (SMA) at $4,443, paving the way to test $4,500.