The latest US inflation data failed to ease the pressure that Federal Reserve policy continues to exert on precious metals.

The May Personal Consumption Expenditures (PCE) Price Index rose 0.4% month-over-month and 4.1% year-over-year.

The annual reading matched market expectations, while the monthly increase came in slightly below the consensus forecast of 0.5%.

Following the release, US equity index futures moved broadly higher.

Nasdaq 100 futures surged 2.3%, S&P 500 futures gained 0.8%, and Dow futures advanced 0.2%, as investors took comfort from inflation data that did not exceed expectations.

The market's current pricing framework continues to revolve around the policy shift signaled during the Federal Reserve's June 17 meeting.

The Federal Open Market Committee (FOMC) voted unanimously (12-0) to keep the federal funds rate unchanged within the 3.50%–3.75% target range.

However, the updated dot plot completely reversed the market's previous expectation of interest rate cuts in 2026, instead signaling the possibility of at least one rate hike during the year.

Nine Federal Reserve officials now expect at least one rate increase in 2026.

This shift has pushed expectations for higher real interest rates upward, placing pressure on gold.

Meanwhile, geopolitical risk premiums have largely faded from the crude oil market.

The market impact of developments surrounding the Strait of Hormuz has continued to ease, with investor attention shifting from concerns over potential shipping disruptions to the normalization of maritime traffic.

Over the past 24 hours, tanker traffic through the Strait has doubled, reaching its highest level since late February.

Vessels have also resumed normal navigation with satellite tracking systems switched back on, while crude oil prices have largely retreated to pre-conflict levels.

As safe-haven buying in oil fades, inflation concerns related to energy prices have eased, allowing risk assets to recover.

It is worth noting, however, that the ceasefire between the United States and Iran, as well as the recovery in shipping activity, remains fragile.

Geopolitical risks have not disappeared.

Gold has merely surrendered its panic-driven geopolitical premium rather than completely exiting the geopolitical risk pricing framework.

The combination of easing tensions in the Middle East and a more hawkish Federal Reserve has reduced gold's attractiveness.

Against a backdrop of rising interest rate expectations and continued US dollar strength, gold's safe-haven appeal has weakened, while the market has largely priced in the possibility of a fourth-quarter rate hike.

Market Analysis:

Gold continued to consolidate at lower levels on the 4-hour chart, with both the MACD lines and histogram contracting below the zero line.

Although the US PCE data met market expectations, the fact that year-over-year inflation remained above 4% briefly revived safe-haven demand, providing short-term support for gold.

Meanwhile, the US dollar softened modestly, reflecting the market's interpretation that the inflation data were not more aggressive than expected, while stronger consumer-related data continued to support expectations for economic growth.

The relatively modest moves in both gold and the US dollar suggest that financial markets have rapidly incorporated the latest information into asset prices.