Gold prices climbed following a softer-than-anticipated U.S. inflation report, which strengthened market expectations that the Federal Reserve may lower interest rates later this year. For the fourth consecutive month, underlying inflation in May rose less than economists had forecast, suggesting that companies are managing to limit the extent to which tariff-driven cost increases are passed on to consumers.
The subdued inflation data pushed the U.S. dollar and bond yields lower, allowing gold to surge as much as 1.1% before settling back slightly. As a non-yielding asset, gold typically benefits from a lower interest rate environment.
Ole Hansen, head of commodities strategy at Saxo Bank A/S, noted that the inflation report boosts the chances of an earlier rate cut than the market’s current October pricing. However, he cautioned that gold remains within its recent trading range and that further economic deterioration is needed for prices to break out.
Ongoing global trade uncertainties have unsettled markets throughout 2025, enhancing gold’s appeal as a safe haven and contributing to a near 27% gain year-to-date. Despite some cooling in recent weeks, concerns about the economic fallout from U.S. tariffs under President Trump continue to keep gold close to its April record highs.
Gold maintained gains even after Trump announced a trade framework with China, including an upfront agreement for rare earth supplies and expanded access for Chinese students to U.S. universities.
Platinum Surges Above Four-Year High on Supply Tightness
Platinum extended its strong 2025 rally, rising more than 40% this year amid signs of tight supply in the market. The precious metal, widely used in jewelry, automotive catalytic converters, and industrial applications, surged up to 5.2% on Wednesday, reaching $1,283.79 an ounce — its highest level in over four years.
After nearly a decade of trading near $1,000 per ounce, platinum’s gains are driven by a persistent market deficit and robust Chinese demand for a cost-effective alternative to gold jewelry. Early 2025 saw significant platinum outflows to the U.S., as traders anticipated Trump’s tariffs on imports, further tightening availability in major trading hubs like Zurich and London.
Indicators of market strain include the implied borrowing cost of platinum, which hit a two-decade peak at an annualized 15%, and a sharp discount of forward prices relative to spot, both signaling supply scarcity.
George Heppel, analyst at BMO Capital Markets, said investor interest is finally responding to the platinum market’s tight conditions.
Production Challenges and Market Dynamics
South Africa, the world’s largest platinum producer, has seen output decline this year due to heavy rains and operational disruptions, supporting price increases. This has benefited mining companies such as Anglo American Plc’s spin-off Valterra Platinum Ltd., Impala Platinum Holdings Ltd., and Sibanye Stillwater Ltd.
Despite these gains, the platinum market faces long-term challenges from the growing adoption of electric vehicles, which reduce demand for platinum and related metals like palladium and rhodium.
“Platinum is a sunset market, it’s a market declining in size,” Heppel remarked.
Market Snapshot
As of 10:35 a.m. in New York, gold was up 0.3% at $1,334.78 an ounce. The Bloomberg Dollar Spot Index declined 0.2%. Meanwhile, silver prices slipped, and palladium edged higher.
