Gold climbs above $4,000 as inflation print curbs rate-hike bets

Gold has smashed past the $4,000 an ounce mark, a significant psychological barrier, propelled by a surprising mix of stubbornly high US inflation data and a dramatic sell-off in the tech sector. While the latest inflation print for May tempered some aggressive expectations for future interest rate hikes, it still underscores persistent price pressures, making the precious metal an attractive hedge against rising costs. Simultaneously, a brutal week for tech stocks, fueled by doubts over the artificial intelligence (AI) trade, sent investors looking for safer places to park their money, finding refuge in gold. The latest Consumer Price Index (CPI) for May soared to 4.2% year-over-year, its highest annual rate since April 2023, while the Personal Consumption Expenditures (PCE) price index, the Federal Reserve preferred inflation gauge, also rose 0.4% monthly. This persistent inflation keeps the Fed on a hawkish path, even if the pace of future hikes might be slightly re-evaluated. Meanwhile, the tech-heavy Nasdaq Composite plunged 4.6% last week, its worst performance since early June, with the 'Magnificent Seven' tech giants collectively shedding nearly $2.8 trillion in market value this month amid growing concerns that the AI boom might be overheating. All eyes will now be on the Federal Reserve next meeting in July for clearer signals on its monetary policy, as markets currently price in a higher chance of a rate hike by year-end despite the tempered immediate expectations. Geopolitical tensions, particularly in the Middle East, also continue to simmer, adding another layer of uncertainty that could further bolster gold appeal as a traditional safe-haven asset. Expect gold to remain sensitive to upcoming economic data and any shifts in central bank rhetoric, as investors navigate a complex landscape of inflation, tech volatility, and global risks.