Gold futures for August delivery on the Comex division of the New York Mercantile Exchange settled 1.2% higher at $4,096.30 a troy ounce on Friday, recovering from a dip below $4,000 earlier in the week. The rebound followed the release of the US personal consumption expenditures price index for May, which rose 0.4% month-on-month, matching economists’ forecasts and easing fears of an even more aggressive Federal Reserve tightening cycle. Despite the daily gain, the metal posted a weekly decline of 3.7%, its fourth consecutive weekly loss.

The inflation print prompted a modest pullback in the dollar and a dip in Treasury yields, offering temporary relief to non-yielding assets. The dollar index, which measures the greenback against a basket of six currencies, slipped 0.3% to 101.19 but remained near its strongest level since May 2025. Money markets still price in three quarter-point rate increases by year-end, though the probability of a September move edged down to around 61% from 69% before the data. Analysts in Copenhagen at Saxo Bank noted that while the technical breakdown continues to weigh on sentiment, falling energy prices and softer bond yields may eventually reduce pressure on the Fed to tighten further, potentially supporting gold.

The metal’s recent weakness has been compounded by its growing correlation with equity markets, particularly the sell-off in technology and artificial intelligence-linked shares. London-based consultancy Capital Economics argued that this linkage is one reason gold prices could face further downside over the next eighteen months. In Tokyo, the yen traded near ¥161.60 per dollar, close to a two-year low, as traders assessed the risk of intervention by Japanese authorities. Data showing an acceleration in Tokyo core inflation in June led some banks to bring forward their expectations for Bank of Japan rate hikes, though the yen’s decline has been orderly rather than sharp, reducing the immediate impetus for action.

Geopolitical tensions in the Middle East added a layer of uncertainty. US President Donald Trump accused Iran of violating a ceasefire by launching drones at vessels in the Strait of Hormuz, while Iranian forces intercepted ships using unauthorised routes. Crude oil prices fell more than 2% on Friday, however, as tanker traffic through the strait gradually resumed, though volumes remained below average. The next focus for bullion traders will be whether the dollar/yen pair breaches ¥161.96, a level that would mark the yen’s weakest since 1986, and any resulting policy response from Tokyo or further signals from the Fed on its rate path.