Gold prices fell for a third consecutive session during Thursday's Asian trade, dropping below the key US$4,000 per ounce level as investors awaited the release of the United States Personal Consumption Expenditures (PCE) Price Index and reassessed the outlook for inflation and interest rates.
By 3:50 pm AEST (5:50 am GMT), spot gold was down 0.3% at US$3,986.35 per ounce, trading near its lowest level since November 2025.
The precious metal remained under pressure despite a modest pullback in the U.S. dollar, with sentiment weighed down by easing inflation concerns following a sharp decline in oil prices.
Crude prices have fallen significantly since the reopening of the Strait of Hormuz, reducing fears of energy-driven inflation and diminishing demand for traditional inflation hedges such as gold.
Analysts at ANZ said markets have recently shifted their focus from energy prices to the broader inflation outlook and monetary policy expectations.
"Despite a slump in energy prices, concerns about persistently higher inflation have seen a significant re-rating of monetary policy expectations.
"Fed member Austan Goolsbee said he remained concerned about inflation and questioned whether all the factors driving prices higher were temporary.
"The more hawkish stance also appears to have derailed the debasement trade, where assets such as gold were favoured over currencies vulnerable to inflation, fiscal and monetary excess."
Additional pressure came from a temporary 60-day sanctions waiver permitting the production, delivery and sale of Iranian crude oil, petroleum and petrochemical products.
The move contributed to further declines in oil prices, pushing crude to its lowest level since before the U.S.-Iran conflict.
Lower energy costs are expected to reduce inflationary pressures on consumers, leading some investors to moderate expectations for additional interest rate increases by the Federal Reserve.
However, according to the CME Group FedWatch Tool, traders continue to assign more than an 80% probability that the Federal Reserve will raise interest rates by the end of the year, a factor that continues to underpin the U.S. dollar.
Investor sentiment has also been affected by a global technology stock sell-off earlier this week, which boosted demand for the U.S. dollar as a safe-haven asset.
Market participants are now focused on the release of the PCE Price Index, the Federal Reserve's preferred inflation measure, for further clues on the future path of US monetary policy.
