(Kitco Commentary) - Gold futures opened Thursday’s session in a state of near-complete inertia. For the first eight hours of trading, price action was essentially flat, printing two consecutive doji candles on the 4-hour chart — a classic sign of indecision in which neither bulls nor bears were willing to commit.
Drilling down to an hourly chart tells the same story in sharper relief: across the first 13 hours of the session, the price shifted a mere $5, opening at $4,094 and settling at $4,101 as of 7:00 PM ET. For a market that has been gripped by volatility all week, that kind of stillness was striking.
To understand Thursday’s session, it’s essential to appreciate the weight of the selling pressure gold has absorbed over the past week. Coming into today, gold had posted four consecutive days of losses totaling $408, or 9.08% of its value — a swift and painful retreat from the highs.
The catalyst for the initial breakdown was last Friday’s stronger-than-expected jobs report, which caught markets off guard and sent gold tumbling from above $4,500 down to $4,353 in a single session. More critically, that decline forced a close below the 200-day simple moving average — a technical threshold gold had not breached since October 2023.
For technically-oriented traders, that breach was a significant warning sign, confirming that momentum had shifted decisively to the downside.
Wednesday brought no relief. The release of the Consumer Price Index report for May added fresh fuel to the bearish case, sending gold down another $190 or 4.45% on the session.
While inflation data might ordinarily provide support for gold as a hedge against rising prices, the market’s reaction reflected a more nuanced calculus: a hotter-than-expected CPI reinforced expectations that the Federal Reserve would maintain its restrictive stance for longer, keeping real yields elevated and reducing the relative appeal of non-yielding assets like gold.
The combination of a strong labor market and persistent inflation painted a picture that was difficult for gold bulls to argue against.
Then came the pivot. After drifting aimlessly for the better part of the day, gold staged a sharp reversal around 7:00 PM ET, ultimately recording a gain of $140 on the session. The most probable driver, based on available information, was a headline out of Washington: President Trump announced that a previously planned military strike on Iran had been called off, citing renewed optimism that a diplomatic deal with Iranian leadership may be within reach.
Geopolitical risk has long been one of gold’s most reliable tailwinds, and the threat of escalation in the Middle East had been quietly underpinning prices even as macro headwinds mounted. The removal of that immediate military threat appeared to trigger a short-covering rally, with sellers unwilling to press their bets against gold in an environment that could shift dramatically on the next headline.
Whether Thursday’s turnaround represents a genuine inflection point or simply a relief bounce within a larger corrective move remains to be seen. The damage inflicted over the past week has been significant, and the technical picture remains challenged as long as gold trades below the 200-day moving average.
Reclaiming that level on a sustained closing basis would be the first meaningful sign that buyers are regaining control. In the near term, traders should also keep a close eye on further developments in U.S.-Iran negotiations, as any breakdown in diplomatic progress could quickly reignite the safe-haven bid.
For now, the bulls have earned one day — but the road to recovery will require more than a single session to rebuild the confidence this market has lost.
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Wishing you, as always, good trading.
