Gold prices saw a sharp drop and swift rebound on Thursday, closing above $3,230 an ounce after briefly touching a five-week low earlier in the day.
During intraday trading, gold slipped to $3,120.60—its lowest level since April 10. However, as the U.S. dollar weakened and safe-haven demand picked up, prices quickly reversed course. The rally gained momentum during the European and U.S. sessions, pushing gold to a session high of $3,232.10 before settling at $3,230.30, up 1.71% or $54.20 on the day.
The bounce was largely driven by weaker-than-expected U.S. economic data. April’s Producer Price Index unexpectedly fell by 0.1%, while retail sales growth slowed to 0.3%. These figures suggest both inflation and consumer demand may be cooling. Following the announcements, markets scaled back expectations for further Fed rate hikes, and the probability of a rate cut in September rose to nearly 70%. The dollar index also dropped below 104.20, lowering the opportunity cost of holding gold and triggering fresh inflows into the precious metals market.
Geopolitical tensions continued to fuel safe-haven buying. Russian President Vladimir Putin pulled out of peace talks with Ukraine set to take place in Turkey, dashing hopes for de-escalation. Meanwhile, although the U.S. and China agreed to a temporary 90-day pause in tariff hikes, the limited scope of the agreement kept trade-related concerns alive, further boosting demand for gold.
From a technical standpoint, gold’s dip toward $3,120 brought it near a key support area aligned with its long-term uptrend line. This triggered algorithm-driven buying and the covering of short positions, accelerating the rebound. Trading volume also surged, coming in roughly 23% above the 30-day average—signaling broader market uncertainty and divided investor sentiment.
Looking ahead, markets are awaiting the University of Michigan’s consumer sentiment report and an upcoming speech from Fed Chair Jerome Powell. If the data continues to point to slowing economic activity and easing inflation, gold may have a path to test the $3,300 level. On the other hand, renewed hawkish signals or an escalation in geopolitical risk could pull prices back toward the $3,150 support zone.