Gold bounces to $4,039.89 as dip buyers emerge near $4,000

Gold rose 1% to $4,039.89 an ounce on Thursday, recovering from a seven-month low as dip buyers stepped in near the $4,000 level.

"The Fed's hawkish shift, which has led to a repricing of rate hike expectations, remains the dominant driver of gold's weakness," Nikos Tzabouras, senior market analyst at Jefferies-owned Tradu.com, said.

The metal had fallen more than 6% since the Federal Reserve's meeting last week and dipped below $4,000 on Wednesday for the first time since November 2025. Bullion is down 28% from its all-time high of $5,594.82 reached on Jan. 29. Markets see a 66% chance the Fed will hike rates in September, CME FedWatch data showed.

At current levels, gold is trading 26.3% below its 52-week high of $5,477.79 and 23.6% above its 52-week low of $3,267.56. The next catalyst for prices will be the Fed's July meeting, where policymakers will update their rate path projections.

ETF Outflows and Dollar Strength Weigh on Sentiment

ETF outflows and the rotation into equities driven by the AI boom are weighing on gold, Tzabouras said, noting that these forces tend to be cyclical and do not subtract from the broader structural case for the metal. The U.S. dollar's strength, supported by the Fed's tightening outlook, has added further pressure on gold prices.

The core personal consumption expenditures price index, the Fed's preferred inflation gauge, rose at a 3.4% annual rate in May, the highest since October 2023, reinforcing the central bank's recent hawkish stance.

On the geopolitical front, Lebanon and Israel are reviewing a U.S.-backed plan for Israeli forces to hand over parts of Hezbollah-era seized territory to the Lebanese army, a development that could shift safe-haven demand dynamics.

This article is for informational purposes only and does not constitute investment advice.