Gold Gains as Dollar Slips, but Dollar Strength Drives a Fourth Straight Weekly Loss

Gold pushed higher on Friday, drawing support from a softer U.S. dollar after this week's inflation data nudged rate-hike expectations a touch lower. Yet for all of the day's firmness, bullion remains on course for its fourth consecutive weekly decline — a useful reminder that one constructive session does not reverse a trend.

Spot gold rose about 1.3% to trade near $4,077 an ounce, while August futures settled 1.2% higher at $4,096.30. The dollar eased from recent highs following Thursday's release of the Federal Reserve's preferred inflation gauge. The Personal Consumption Expenditures Price Index climbed 4.1% over the twelve months through May, matching the consensus of economists polled by Reuters. In response, traders trimmed the odds of a September rate hike to roughly 59%, down from 64% earlier in the week, according to CME Group's FedWatch Tool. Even so, the market is now carrying three Fed rate increases for the year on its books.

I would caution against reading too much into the bounce. The mechanics here run against gold: higher rates and tighter policy lift bond yields and improve the return on interest-bearing assets, which steadily erodes the appeal of non-yielding bullion. Friday's gain is the dollar giving back a little ground, not a change in the underlying current.

That current is exactly where I have been focused. The old reflex — fear lifts gold directly — is no longer doing the work it once did. Today the impulse routes through energy first. Geopolitical risk pushes oil higher, oil feeds inflation, inflation hardens the Fed's resolve, and only then does the chain reach the metal. TD Securities made the same point this week, noting that given gold's inverse relationship with both firmer oil and a stronger dollar, sustained strength in energy markets could weigh on the metal in the months ahead. I agree, and I'd add that this is precisely why the safe-haven trade has felt so unreliable since the start of the year.

The new chair has reinforced that backdrop. Fed Chair Warsh has reaffirmed the central bank's commitment to bringing inflation to heel, easing speculation that he might bend to pressure from President Trump for premature cuts. The Fed also raised its 2026 PCE projections. A hawkish chair holding the line keeps the dollar bid, and a bid dollar keeps gold on the defensive.

The physical market tells its own story. Gold moved to a premium in India this week for the first time in roughly six weeks, as the price correction finally drew buyers back in. In China, the top consumer, demand stayed subdued. That divergence is worth watching — bargain-hunting in one market, hesitation in the other.

Silver Down Nearly 10% on the Week

Silver recovered above $58 an ounce on Friday but still finished the week down close to 10%, extending the prior week's losses as the firm dollar pressed on the entire complex. The same forces apply — Warsh's resolve, the upgraded inflation outlook, and three hikes now priced for the year.

Silver, however, has carried the heavier burden. It has lagged gold badly since the outbreak of the Iran conflict and has now surrendered roughly half its value from January's record high. Its dual nature is the reason: as much industrial metal as monetary one, silver is far more exposed to shifts in risk appetite and to the market's expectations for global growth. When traders grow cautious on both, silver feels it first — and feels it most.

For now, $4,000 remains the line that matters in gold. Hold it, and this week's selling looks like a correction within a larger advance. Lose it, and the conversation changes.

Wishing you as always good trading,