Gold traded just under $4,700 in early European hours on Wednesday and stayed under pressure for a second day, but selling remained limited. A stronger US Dollar, linked to higher inflation data and ongoing geopolitical tension, weighed on the non-yielding metal.<\/p>\n
US CPI rose from 3.3% to 3.8% year on year through April, a near three-year high, while core CPI increased 0.4% in April and held at 2.8% year on year, a seven-month high. Markets priced about a 35% chance of a US rate rise by year-end, adding to the headwind for gold.<\/p>\n
US Treasury yields moved higher, with the 30-year yield briefly reaching 5.0% and the two-year yield staying near 4%. Oil prices remained elevated amid a US-Iran stalemate, while tensions also centred on Iran\u2019s nuclear programme and the Strait of Hormuz.<\/p>\n
Traders showed caution ahead of a two-day Trump\u2013Xi meeting, as well as US PPI data and fresh geopolitical updates. On charts, a bearish double-top formed near $4,765\u2013$4,770, with support around the 200-hour SMA near $4,655.51; MACD stayed slightly positive and RSI sat just below 50.<\/p>\n
Looking back to this time last year, in May 2025, the mood was quite different as hotter-than-expected inflation at 3.8% had markets bracing for a more aggressive Federal Reserve. We saw the strong dollar pushing gold down below the $4,700 mark as a result. The entire focus was on the prospect of further rate hikes to combat rising consumer prices.<\/p>\n
Today, the situation has evolved significantly, with the latest Consumer Price Index (CPI) report showing inflation has cooled to 2.9% year-over-year. This is a marked improvement from the 3.8% we saw last year and moves us much closer to the Fed’s target. This change fundamentally alters the landscape for non-yielding assets like gold.<\/p>\n
Consequently, market expectations for the Fed have completely flipped from the hawkish stance of 2025. Instead of pricing in rate hikes, fed funds futures now indicate a roughly 70% probability of at least one rate cut by the September 2026 meeting. This potential for lower borrowing costs makes holding gold more attractive.<\/p>\n
This shift is reflected in U.S. Treasury yields, which are no longer the primary headwind for gold they were a year ago. The benchmark 10-year Treasury note yield has fallen to around 4.1%, a considerable drop from the levels that pushed the 30-year towards 5% in 2025. A lower yield environment tends to weigh on the dollar, providing further support for gold prices.<\/p>\n
Geopolitical risks are also benefiting gold more directly now than they did last year. While the US-Iran stalemate in 2025 strengthened the dollar as the primary safe haven, current trade tensions are seeing capital flow into gold. This restores its traditional role as a hedge against global uncertainty.<\/p>\n
For derivative traders, this environment suggests a shift from the cautious or bearish positioning of 2025. With these macroeconomic tailwinds building, buying out-of-the-money call options for the third quarter could offer leveraged upside with defined risk. Implied volatility remains moderate, making premiums on these options relatively affordable for now.<\/p>\n
Looking at the current charts, gold has broken well past the $4,770 resistance that capped the market last year and is now consolidating around $4,950. A key level to watch for is a sustained break above the psychological $5,000 mark. Options traders could use this level as a strike price for building bullish positions, anticipating the next leg up.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Gold hovers near $4,700; stronger dollar, rising yields, and geopolitical tensions pressure prices as traders await data.<\/p>\n","protected":false},"author":103,"featured_media":16975,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[6],"class_list":["post-52182","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates","tag-gold"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/52182","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=52182"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/52182\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16975"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=52182"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=52182"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=52182"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}