Gold holds pullback from July peak

Gold hovered close to the $3,300 per ounce mark on Thursday, holding most of the losses sustained since testing record highs above $3,400 earlier in July.

The metal has been weighed down by mounting expectations of a hawkish Federal Reserve and waning demand for traditional safe-haven assets. Data released this week showed that both core and headline PCE price indices came in above expectations for June, reinforcing concerns that inflation remains stubbornly persistent across key sectors of the U.S. economy.

This undercut hopes for near-term rate cuts and lent strength to the U.S. dollar, traditionally a headwind for gold prices.

Adding to the pressure, lower-than-expected initial jobless claims reinforced the narrative of a resilient labor market, suggesting that the Fed may have more leeway to keep interest rates elevated to combat inflation. Consequently, rate futures adjusted to reflect increasing confidence that the Fed will keep rates unchanged at its September meeting.

The market sentiment was further shaped by a higher-than-expected second-quarter U.S. GDP growth figure, pointing to continued economic momentum. However, the robustness of the data was somewhat clouded by distortions stemming from volatile foreign trade patterns. Many firms accelerated shipments in response to renewed tariff threats by President Trump, leading to imbalances in trade flows.

Adding to investor unease, a new round of tariffs on U.S. imports was scheduled to begin Friday. While most trading partners managed to negotiate levy rates below those initially threatened by the White House, the overall trade tensions contributed to an environment of geopolitical uncertainty.

Yet paradoxically, rather than lifting gold as a haven, the resolution of some tariff threats and the avoidance of worst-case scenarios helped temper the metal’s appeal as a hedge, further softening demand.