Gold Surges More Than 3% as Dollar Stumbles and Stagflation Fears Rattle Markets

Gold futures posted one of their strongest single-session gains of the summer on Thursday, surging 3.13% as the U.S. Dollar Index fell 0.85% following a data-heavy morning that painted a picture of stagflation for the American economy. August gold opened at $4,060.70 per troy ounce and climbed steadily through the day, breaching the psychologically important $4,100 level and pushing toward the $4,160 range as dollar weakness, a growth miss, and a spiking price deflator converged into precisely the cocktail the precious metal needed to extend its rebound from mid-July lows.

The catalyst for today's broad dollar selling was Wednesday's Federal Reserve decision. The Federal Open Market Committee voted 9-3 to hold the federal funds target range at 3.50%–3.75%, marking the fifth consecutive meeting without a policy change. Three dissenting members pushed for an immediate 25-basis-point hike, a split that Chair Kevin Warsh playfully termed a "good family fight." Markets interpreted the hold as an implicit acknowledgment that policymakers lacked the consensus to tighten further, and despite the hawkish minority, the dollar sold off sharply as traders priced out near-term rate hike expectations. Treasury yields eased alongside the dollar, providing additional tailwinds for the non-yielding metal.

Thursday's economic releases deepened the bullish case. The Bureau of Economic Analysis reported that Q2 2026 real GDP expanded at an annualized rate of just 1.5%, missing the 2.1% consensus estimate and decelerating from the 2.1% pace recorded in the first quarter. The drag came from a widening trade deficit, government spending cuts, and slowing export growth, though consumer spending surged 3.2%. The more alarming figure was the GDP Price Index, which registered 6.3% against a forecast of 3.6% — an inflation shock that amplified the stagflation read and sent traders toward gold as a store of value. The Core PCE Price Index for June offered modest relief, printing at 0.1% month-over-month against an expected 0.2%, with the year-over-year reading holding at 3.3%. Slower growth, stubbornly elevated prices both helped prop gold up today.

The single area of optimism came in the labor market. Initial jobless claims for the week ending July 25 came in at 197,000, beating the 200,000 estimate and remaining near historically low levels, while continuing claims fell to 1.782 million, well below expectations. On any other morning that might have blunted gold's advance, but with the growth and inflation data dominating the narrative so completely, the labor report barely registered.

Underpinning the favorable macro backdrop is the unresolved conflict in the Middle East, now entering its fifth month. U.S. and Iranian forces continued to trade missile barrages on Thursday, and reports confirmed that Tehran has rejected Oman's proposal for joint regional management of the Strait of Hormuz, dashing hopes for meaningful de-escalation in one of the world's most critical energy chokepoints. Saudi Arabia has taken a more active role in targeting Iranian proxies, and diplomacy appears to have stalled again.

Technically, today's move carries weight. Gold has recaptured the $4,100 handle with conviction after spending much of July struggling to hold that level, and a 3% single-session surge backed by volume suggests more than a reflexive bounce. Also today was gold’s first daily close above the descending trendline that served as resistance for the last five months if it can flip this trendline into support we can say with some certainty that gold has entered a bullish phase.

With the September FOMC meeting now on the radar and markets pricing an 63% probability of a rate hike, the tension between a hawkish Fed and deteriorating growth will be an active driver for gold through August. For now, the path of least resistance in gold is higher.

Wishing you, as always, good trading.