Gold prices regained traction on Thursday during the North American trading session, lifted by weaker-than-expected U.S. economic data that revived hopes of Federal Reserve policy easing. At the time of reporting, spot gold (XAU/USD) was up 0.82% to $3,202, bouncing back from a five-week low.
The rebound came after U.S. factory gate inflation and consumer spending both showed signs of slowing. April’s Producer Price Index (PPI) unexpectedly declined by 0.5% month-over-month, missing forecasts of a 0.2% gain. Core PPI, which excludes volatile food and energy prices, also dropped 0.4%, defying projections for a 0.3% increase.
Retail Sales growth for April slowed sharply, rising just 0.1% from the previous month, well below March’s upwardly revised 1.7% surge. The data suggests that consumer spending has been impacted by ongoing U.S. tariffs, contributing to a broader economic deceleration.
Meanwhile, Initial Jobless Claims for the week ending May 10 held steady at 229,000, aligning with expectations.
Gold found renewed buying interest as the U.S. Dollar Index (DXY) slipped 0.15% to 100.88, and traders increased bets that the Federal Reserve will cut rates by 53 basis points in 2025—up from 48.5 basis points priced in the day before.
Trade Tensions and Rate Bets Drive Volatility
The recent easing of U.S.-China trade tensions has had a mixed impact on bullion. While improved risk appetite initially pushed gold prices down from highs near $3,326 to as low as $3,120—a drop of more than $120—the weak U.S. data has since helped reverse some of those losses.
Market focus now shifts to upcoming Federal Reserve commentary and the University of Michigan’s Consumer Sentiment Index, due later this week, for further direction.
Technical Outlook: Resistance at $3,200 Key to Near-Term Direction
Technically, gold’s recovery hinges on its ability to hold above the $3,200 threshold. A sustained close above that level could open the path toward the May 14 high of $3,257 and possibly retest the $3,300 zone.
However, momentum indicators, including the Relative Strength Index (RSI), suggest the rally may be corrective in nature rather than a reversal. If gold fails to maintain its grip above $3,200, the downside could resume, with initial support seen at the 50-day Simple Moving Average (SMA) near $3,155, followed by $3,100.
For now, the precious metal remains caught between hopes for Fed easing and lingering downside pressure from technical and geopolitical headwinds.
