The international gold price has fallen below $4,300 per ounce, with precious metals broadly erasing their gains for the year. On June 8th, the decline in precious metals was pronounced in the domestic futures market. By the afternoon close, the main domestic contracts saw silver futures drop 8.83% and gold futures fall 3.67%, while platinum and palladium both declined by over 5%.
In the international market, the spot price of gold in London once again fell below the $4,300 per ounce mark, completely wiping out its year-to-date gains. Spot gold in London is now down about 1% for the year, while spot silver has fallen by approximately 7%.
"Since May, gold prices have surged and then retreated, with their center of gravity shifting lower. By June 8th, domestic spot 99.99% gold was quoted at 944.5 yuan per gram, a cumulative decline of 7.45% compared to early May," said Huang Jiaqi, a precious metals analyst at Zhuochuang Information. He noted that early in May, signals of U.S.-Iranian peace talks briefly pushed gold higher on expectations of the Strait of Hormuz reopening and easing inflation. However, as India—a major consumer—increased gold import tariffs, Federal Reserve dove Neel Kashkari resigned, and the U.S. and Iran remained deadlocked on key issues like uranium enrichment, gold entered a downward trend in mid-to-late May.
Up to now, a formal U.S.-Iran agreement has not been reached. Meanwhile, the resumption of conflict between Israel and Iran, coupled with U.S. non-farm payroll data significantly exceeding expectations, has led the market to almost fully price in expectations for Fed rate hikes. The prospect of tightening liquidity is putting pressure on gold prices.
Zhan Dapeng, a non-ferrous metals analyst at Everbright Futures, also commented that, on the macro front, a dense release of U.S. economic data is providing dual validation of economic resilience and inflationary pressures. On the economic side, the ISM Manufacturing PMI rose to 54, its highest level since May 2022, with the new orders index jumping 2.7 points to 56.8, marking five consecutive months in expansion territory.
However, the prices paid index remained high at 82.1, staying in the high-risk zone above 80 for two consecutive months, indicating that energy cost pressures from the Middle East conflict are being passed downstream. More critically, U.S. non-farm payrolls increased by 172,000 in May, far exceeding the market expectation of 85,000, with April's data revised up to 179,000, while the unemployment rate held steady at 4.3%.
The resilience of the economy and job market, combined with the backdrop of persistent inflation rebound, has rapidly compressed market expectations for Fed rate cuts, while rate hike expectations have further heated up. Several Fed officials have struck a hawkish tone, with Christopher Waller supporting the removal of language indicating a bias toward rate cuts from policy statements.
On the geopolitical front, U.S.-Iran negotiations have been marked by brinkmanship, adding uncertainty to predictions about the Middle East situation. Although former President Trump repeatedly stated that a deal would be reached, it has yet to materialize, contributing to market volatility.
Nevertheless, data released by the People's Bank of China on June 7th showed that China's gold reserves increased to 74.96 million ounces by the end of May, with a monthly addition of 320,000 ounces. This marks the 19th consecutive month of increases and the largest single-month gain since the continuous accumulation began in late 2024. This intensified gold buying amid downward price pressure suggests a strong strategic allocation for the medium to long term.
Zhan Dapeng believes the short-term focal point for precious metals is the upcoming Federal Reserve policy meeting in June. While the market has already compressed the likelihood of a rate cut this year to near zero, and the probability of a hike is steadily rising in market pricing, there is still hope to glean the Fed's stance on inflation and its expectations for future rate cuts from the meeting.
For gold, expectations of rising U.S. real interest rates imply persistently high opportunity costs for holding it. Global gold ETFs have seen continuous net outflows since May, and speculative long positions on COMEX have been significantly reduced. The market is caught in a tug-of-war between "hawkish expectations dominating" and "geopolitical safe-haven support underpinning," making it likely that gold prices will maintain a range-bound consolidation between $4,000 and $4,500 per ounce.
"For the outlook, continue to lower expectations for gold prices in the first half of the year. Monitor whether abnormal 'buy the rumor, sell the news' volatility occurs around the Fed meeting, and also pay attention to the progress of U.S.-Iran talks. Silver, platinum, and palladium are broadly following gold lower, but their volatility is significantly higher. If a U.S.-Iran ceasefire materially advances alongside confirmation of gold price stabilization, these metals may see a corrective rebound. Until then, caution is advised," he stated.
Huang Jiaqi opined that in the short term, the sharp decline in gold prices is testing multiple technical support levels, increasing the probability of a rebound driven by short covering. This could lead to a slight price recovery. This week, the focus is on the core U.S. May CPI data and its impact on market sentiment.
From a medium-term perspective, even if U.S.-Iran peace talks succeed and the Strait of Hormuz reopens, restoring shipping capacity will require a buffer period. Furthermore, repairing damage to oil and gas production facilities in the Middle East will take even longer. Coupled with inflation being a lagging indicator that is difficult to correct quickly, the probability of a rate cut within the year is considered very low, suggesting little significant improvement in price performance.
In the long term, against the backdrop of a weakening confidence in fiat currency systems and continued central bank gold purchases, and considering gold's historical price resilience in high-inflation environments, it still possesses long-term allocation value.
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