Gold prices advanced on Wednesday, climbing above $4,610 per ounce, as investors reacted to a combination of softer U.S. economic data and growing risk-off sentiment. Recent reports pointed to a gradual cooling in core inflation, allowing markets to look beyond earlier distortions linked to temporary government shutdowns. This has strengthened the perception that inflationary pressures are easing in a controlled manner.
The shift in data has had a clear impact on interest rate expectations. Market pricing now suggests the Federal Reserve could move toward two to three rate cuts this year, a notably more dovish outlook compared with the single cut indicated in the Fed’s latest projections. As expectations for lower rates increase, non-yielding assets such as gold have become more attractive, providing ongoing support to bullion prices.
Safe-haven demand has also picked up amid rising uncertainty. Concerns over the Federal Reserve’s independence resurfaced after U.S. prosecutors launched a criminal inquiry connected to Chair Jerome Powell’s June testimony, adding a political risk premium to markets. Meanwhile, geopolitical tensions remain elevated, with investors closely watching developments involving Iran following renewed warnings from the United States. Together, these factors have reinforced gold’s appeal as a hedge against economic, political, and geopolitical instability.
