Gold edged higher in early trading on Thursday, but prices remain below the critical $4,500 an ounce consolidation level that has defined recent market action. Spot gold rose 0.3% to $4,226.02 an ounce, clawing back some ground after a 1.7% weekly decline.

The metal's weakness stems from growing investor anxiety that the Federal Reserve may need to raise interest rates more aggressively than initially expected, making non-yielding assets less attractive. Gold fell toward $4,000 an ounce earlier in the week as Treasury yields climbed on hawkish Fed speculation.

Analyst Heng Koon How from UOB noted that forecasts remain contingent on the outcome of the Fed's June meeting and guidance from Chairman Kevin Warsh. The bank projects gold will trade around $4,600 an ounce in the third quarter and $4,800 an ounce in the fourth quarter.

Further downside risk exists if Warsh signals increasing inflation concerns, potentially pushing prices below the $4,000 an ounce threshold. The precious metal continues to face headwinds from elevated real yields and persistent inflation fears that have kept investors favoring cash and bonds over commodities.