Gold Claws Back from Two-Month Low as Iran Détente Offsets Sticky Core Inflation

Gold prices staged a recovery on Friday, closing at $4,569.90 for a 1.57% daily gain and bringing the weekly advance to 1.08%. The bounce came after the precious metal touched a two-month trough of $4,370 earlier in the period, lifted by a rare convergence of positive signals: tentative progress in US-Iran negotiations and inflation data that, while elevated, did not catch the market off guard. Yet the rally remains fragile, with the metal trading below its 50-day moving average and a potentially pivotal US jobs report just over a week away.

Hopes for a diplomatic breakthrough in the Middle East provided the initial spark. Reports emerged that Washington and Tehran are discussing a memorandum of understanding covering a 60-day truce and the reopening of the Strait of Hormuz. Iranian spokesman Baghaei quickly cautioned that no final agreement is in place and that nuclear talks continue, but the mere prospect of a détente was enough to push gold higher as oil prices eased and safe-haven demand receded. The geopolitical risk premium that had supported bullion in recent weeks is now being pared back.

On the macro front, the core Personal Consumption Expenditures (PCE) price index — the Federal Reserve’s preferred inflation gauge — rose 3.3% year-on-year in April, ticking up from March. The headline PCE index climbed 3.8% annually, matching forecasts. While the numbers were not hot enough to trigger a panic, they reinforced the narrative that inflation remains stubborn. The Chicago Purchasing Managers’ Index added to the picture, surging to 62.7 in May against expectations of 50.5, suggesting the economy retains surprising momentum. As a result, markets now price a 42–50% probability of another rate increase by the end of the year — a headwind for non-yielding gold.

Should investors sell immediately? Or is it worth buying Gold?

From a chart perspective, Friday’s move represented a bullish reversal after the metal tested support at $4,381, a level that held firm on the week. The close left gold 1.49% below its 50-day moving average of $4,639.16, while the Relative Strength Index at 49.8 signaled neutral conditions. Analysts are eyeing a break above $4,660 as the next upside target; failure to hold the $4,381 support zone could open the door to a decline toward $4,094.

Major institutions remain bullish on the longer-term outlook. JPMorgan sees gold reaching $6,000 by year-end, while Goldman Sachs targets $5,400 by end-2026. COMEX net-long positions increased by roughly 5,000 contracts to around 100,000, reflecting growing speculative appetite. However, a significant headwind emerged from India, where the government raised import duties on gold to 15%, causing physical bullion to trade at a discount to global prices in some local markets. Year-to-date, gold is up 5.87%, still about 16% below its January peak of $5,450.

The immediate catalyst for gold will be the US employment report due on June 5. A weaker-than-expected jobs number could revive hopes for rate cuts and provide a fresh bid for the yellow metal, while a robust print would likely cap gains and reinforce the Fed’s hawkish stance. Traders are treading carefully, aware that the combination of sticky inflation and a resilient labor market leaves little room for the central bank to pivot anytime soon. For now, the metal remains caught between structural demand from institutions and the persistent drag of elevated interest rates — a tug-of-war that the next payrolls figure may help resolve.

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