Overnight, spot gold in London traded higher, rising 0.81% to $4,100.34 per ounce, while SHFE gold climbed 1.2% during the night session.

U.S. economic data released on Wednesday showed second-quarter GDP grew at an annualized rate of 1.5%, missing expectations. The PCE price index rose 3.4%, with a negative monthly reading. Cooling inflation expectations led to a retreat in the U.S. dollar index, triggering a short-term rebound in gold. However, the volatility of the U.S.-Iran situation and the fact that the inflation alarm has not been completely silenced must be considered.

The U.S. June PCE price index fell 0.1% month-over-month, the first negative monthly reading since 2020, while the annual increase narrowed from 4.1% in the prior month to 3.7%. Core PCE, which excludes energy, saw its year-over-year growth ease slightly from 3.4% to 3.3%, with a monthly increase of just 0.1%, below the market expectation of 0.2%. The moderation in inflation stemmed from lower oil prices in June, but with ongoing U.S.-Iran conflicts in July, inflation expectations are prone to fluctuations.

Initial jobless claims for the week ending July 25 rose to 197,000 from the previous week's 188,000, though this was slightly below the 200,000 forecast. On the geopolitical front, the U.S. and Iran continue to trade blows, casting a shadow over negotiation prospects.

Yesterday's sharp decline in the dollar index helped fuel gold's rebound. While the mutual strikes between the U.S. and Iran appear to have a diminished negative impact on gold from a market perspective, focus is likely to shift to Federal Reserve policy. With the probability of a September rate hike rising rather than falling, the rebound should be viewed with caution. Given the recurring geopolitical tensions and macro uncertainty, a light position is advised for now.