Gold's Rally Halted as Fed's Waller Labels Rate-Cut Chatter 'Crazy' and US Data Sizzles

Fed's Waller dismisses rate cuts, calls hike possible; US manufacturing at 4-year high pushes gold to $4,525, down 0.5%. Geopolitical risks limit losses.

A single hawkish remark from a key Federal Reserve official, combined with the strongest US manufacturing reading in four years, has knocked gold off its recent footing. The metal is trading around $4,525 an ounce, roughly half a percent lower on the day, as investors reassess the likelihood of any near-term monetary easing.

Fed Governor Christopher Waller threw cold water on rate-cut expectations Friday, describing any discussion of lowering borrowing costs in the near future as "crazy." He went further, arguing that a rate increase was as probable as a cut and calling for the removal of the so-called "easing bias" language from the Fed's official statement. His rationale: inflation is not moving in the desired direction. The current federal funds rate sits unchanged at 3.50%-3.75%.

Adding to the hawkish tone, Thursday's US purchasing managers' index for May surged to 55.3 points — the highest reading in four years. Separate data showed initial jobless claims at 209,000, below expectations. The combination gives the Fed little room to pivot. The CME FedWatch Tool now assigns a 58% probability to a further rate hike by the end of 2026. Ten-year Treasury yields are hovering near 4.6%, amplifying the opportunity cost of holding non-yielding bullion.

Yet gold is not entirely friendless. Geopolitical tensions continue to provide a floor. Iran's Supreme Leader Khamenei ordered on May 21 that the country's enriched uranium stockpiles cannot leave the country — a condition the Trump administration had made central to any nuclear deal. That has pushed a diplomatic resolution further out of reach. UBS analyst Giovanni Staunovo warns that higher oil prices from the standoff only add to inflationary pressure, which further reduces the odds of Fed easing.

On the price front, spot gold last changed hands at $4,521.30, down 0.50% from the previous close. June futures eased $29.20 to $4,513.30. The metal has shed roughly 17% from its 52-week high of $5,450 reached in late January 2026, illustrating the depth of the ongoing consolidation.

Silver presented a mixed picture. It slipped to around $75.93, losing nearly 1% according to one report, while another showed it gaining over 1% to $76.65 — a divergence likely reflecting different pricing references. Platinum traded between $1,936.60 and $1,962, down on the day. Peter Grant of Zaner Metals sees potential for short-term bounces if the dollar softens, but stresses that the overarching interest-rate outlook remains the dominant force.

Structural developments offer a longer-term undercurrent. Hong Kong is expected to launch a new gold clearing system by July, a move that should strengthen Asia's role in the global bullion trade. For now, however, the metal remains hostage to the trajectory of US monetary policy. As long as markets price in a further Fed tightening, gold will struggle to regain its footing — even with a geopolitical backdrop that would normally call for safe-haven flows.