Pasofino Gold Limited (TSXV: VEIN)
Re-defining the Dugbe Gold Project
Gold prices rallied sharply on Thursday, with COMEX August futures breaching the $3,400 per ounce mark to hit a one-month high, as escalating Middle East tensions and growing expectations for Federal Reserve rate cuts drove strong safe-haven demand.
By mid-morning U.S. trading, COMEX gold futures surged 1.98% to settle at $3,410.10 per ounce, marking the biggest single-day gain in nearly three weeks. Spot gold followed suit, rising 1% to $3,388.20, while July silver futures edged up 0.27% to $36.36.
The rally was fueled by heightened tensions in the Middle East, where reports indicated the U.S. had ordered non-essential personnel to evacuate parts of the region amid concerns over a potential Israeli strike on Iran’s nuclear facilities. Iran retaliated with threats against U.S. citizens in the region if its nuclear sites were attacked. The standoff casts a shadow over U.S.-Iran nuclear talks scheduled for this weekend in Oman.
“Any escalation in military tensions could push gold toward $3,500,” said Jim Wyckoff, senior analyst at Kitco Metals. Technically, bulls have strengthened their near-term advantage, with the next resistance level at $3,477.30 and support holding firm at $3,300.
Beyond geopolitical risks, softer U.S. inflation data reinforced market expectations for Fed rate cuts. The May Producer Price Index (PPI) rose just 0.1% month-on-month, below forecasts of 0.2%, while core PPI (excluding food and energy) also missed estimates. This followed Wednesday’s tamer-than-expected Consumer Price Index (CPI) reading.
“This inflation report practically greenlights Fed rate cuts,” said Bart Melek, head of commodity strategy at TD Securities. According to CME FedWatch, traders now price in an 80% chance of a September rate cut, with another likely in October. The dovish shift pushed the U.S. dollar to a seven-week low, while 10-year Treasury yields dipped to 4.361%, reducing the opportunity cost of holding gold.
Despite the recent rally, major institutions remain optimistic. The World Gold Council reported central banks added 244 tonnes to reserves in Q1 2025, with China’s holdings hitting a six-year high of 2,292 tonnes after five straight months of purchases.
Goldman Sachs raised its 12-month gold price target to $3,750, citing persistent geopolitical risk premiums and strong Asian investor demand.
However, analysts caution about potential volatility. ING warned that breakthrough U.S.-Iran negotiations or stronger-than-expected U.S. jobs data could trigger profit-taking. Traders are now eyeing the $3,450 resistance level and Friday’s University of Michigan consumer sentiment report for further direction.
