Gold closed back above $4,000 an ounce Thursday, the same day the United States reported its hottest headline inflation reading since the Iran war began. That is not a contradiction. It is the clearest evidence yet that this week's selloff in gold was never really about inflation at all.
Why a Three-Year-High Inflation Print Just Sent Gold Higher
The Bureau of Economic Analysis reported Thursday that headline PCE inflation rose 4.1% year over year in May, the fastest pace since April 2023, with core PCE at 3.4%, the hottest since October 2023. Both readings landed exactly where economists expected. That last detail is the whole story.
Tuesday and Wednesday, gold fell from $4,124 to a settlement below $4,000 for the first time since November, as traders priced a Fed under Chair Kevin Warsh moving toward a September hike. This morning's Behavioural Desk framed that move as loss aversion: a safe-haven asset sold on a monetary policy fear unrelated to the geopolitical risk it was bought to hedge. Today's close confirms the diagnosis.
A print that validates every hawkish argument the Fed has made since June 17 produced a rally instead of a selloff, because the market had already priced something worse. The implied odds of a September hike eased to 63% from 68% the prior session. Treasury yields fell. The dollar gave back its advance.
Gold's daily path since June 1 shows the FOMC driven slide below $4,000 and Thursday's rebound moving at almost the same speed in opposite directions, a pattern that fits a sentiment swing more than a structural repricing.
Spot gold settled at $4,039 on June 25, rebounding from a sub-$4,000 close the previous session. Source: USAGOLD Daily Precious Metals Market Report.
This morning's Market Desk credited Wednesday's chip sector rally for whatever resilience showed up Thursday. By the close, the leadership had shifted entirely. Shopify fell roughly 1%. Celestica and Constellation Software added modestly. The session's real engine was financials and gold miners, Agnico Eagle, Barrick, and Franco-Nevada among them, up on falling yields, not semiconductors.
The Bank of Canada Just Told You How Much It Trusts This Oil Decline
WTI crude fell for a fourth consecutive session Thursday, settling near $69.40, a level that all but erases the premium the market has carried since the Strait of Hormuz crisis began on February 28. That decline is the mechanism behind two of this morning's desk pieces, and the Bank of Canada just put a number on how much it trusts it to hold.
Minutes released Thursday afternoon showed Governing Council agreeing to keep policy explicitly flexible in response to two named variables: potential new US trade restrictions, and shifts in energy prices. Those are not abstract risks. They are the exact two inputs this morning's Tax and Wealth Desk is counting on to deliver a lower prescribed rate in October, and the exact mechanism this morning's Geopolitical Desk flagged as underpriced: the toll-free shipping window under the June 17 memorandum expires August 17, after which Iran's sanctioned toll authority has reserved the right to start charging vessels.
WTI's slide from $108.66 in mid-May to Thursday's close near $69.40 has erased most of the premium built up since the conflict began, well ahead of the toll-free window's expiry.
WTI settled near $69.40 on June 25, its fourth consecutive losing session. The toll-free shipping window under the June 17 US-Iran memorandum expires August 17. Source: Investing.com, Trading Economics.
Oil has fallen so far that almost no premium is left to absorb a shock if that deadline does not pass quietly. The same decline pulling Government of Canada yields toward a three-month low, the input the prescribed rate calculation depends on, also makes an August disruption a proportionally larger move than it would have been a month ago. The Bank of Canada, on the record this afternoon, is not treating either direction as settled. Advisors using this morning's prescribed rate timing argument with clients should treat October as a base case, not a certainty, and keep August 17 on the calendar alongside it.