Market sentiment remains caught between cooling inflation data and a resilient economy characterized by strong retail sales and low jobless claims. While investors initially anticipated a clear policy pivot, the persistence of energy-related inflation has kept the prospect of a rate hike on the table. The 10-year Treasury yield, hovering near 4.62%, continues to exert downward pressure on non-yielding assets, leaving gold struggling to break above its $4,150 resistance level.

Geopolitical tensions in the Strait of Hormuz and the Bab el-Mandeb shipping lanes add another layer of volatility. Despite a recent retreat in crude oil prices—with Brent hovering near $86.00—the risk of supply chain disruption provides a baseline of support for bullion. Traders are now shifting their focus toward Thursday’s GDP and PCE inflation reports, alongside guidance from Fed Chair Kevin Warsh, to determine if gold can maintain its $4,000 support floor or if a deeper correction toward $3,950 is imminent.