After a prolonged period of decline, the gold market has experienced a powerful rebound.
On June 15th, international gold prices surged strongly following a period of sustained volatility. At the time of writing, spot gold in London was trading at $4,314.26 per ounce, marking a significant intraday gain of 2.26%. It reached a high of $4,335.56 per ounce, reclaiming the key $4,300 per ounce level.
The futures market also moved higher in tandem. At the time of writing, COMEX gold futures were up 2.29% for the day at $4,335.9 per ounce, having reached a peak of $4,356.8 per ounce, also breaking through the $4,300 barrier and strengthening in line with the spot market.
It is noteworthy that the international gold market had just undergone a sharp 'probe of lows' prior to this. On June 11th, London spot gold fell to a yearly low of $4,023.1 per ounce, retreating to levels last seen in November of the previous year and erasing all its gains for the year.
Regarding this substantial rebound, analysts generally agree that the core driving force stems from market optimism over the expectation of a phased agreement between the US and Iran.
"The strong rise in precious metals today is primarily driven by expectations for a phased US-Iran agreement," said Xia Yingying, head of the precious metals and new energy research group at Nanhua Futures. She explained that after over two months of negotiations, the US and Iran announced an agreement on June 14th regarding a ceasefire and navigation in the Strait of Hormuz. A memorandum of understanding is scheduled to be signed in Switzerland on June 19th, with a 60-day period set for negotiations on nuclear issues. The retreat in geopolitical risk premium pushed Brent crude below $85 per barrel. The decline in oil prices weakens inflation expectations and reduces the necessity for the Federal Reserve to maintain a tight monetary policy. Federal funds futures indicate that market pricing for rate hikes this year has been reduced from one last week to 0.635 times. Both the US dollar index and US Treasury yields fell, with lower real interest rates boosting the valuation repair of precious metals.
Hou Yanjun, General Manager of Houshi Tiancheng Investment, also noted that news emerged this morning of a memorandum of understanding reached between Iran and the US with Pakistan's mediation. The agreement reportedly requires the US military to subsequently lift its blockade of the Strait of Hormuz, and Iran will reopen the strait, with a final agreement to be reached within 60 days. This event is currently the main factor influencing the precious metals market. Once the strait is open for navigation, crude oil prices are likely to decline further, cooling inflation and rate hike expectations. The market liquidity pressure triggered by the oil shock will also ease, potentially leading to a short-term rebound in gold and silver.
So, has a reversal in the gold price trend truly arrived?
In response, Sui Dong, a wealth researcher at Paipai.com, believes that the current rebound is still a technical correction from oversold conditions. Whether it can evolve into a medium-to-long-term trend reversal depends on the smooth implementation of the US-Iran agreement and whether subsequent inflation and employment data can genuinely suppress rate hike expectations. Among these factors, this week's Federal Reserve FOMC meeting is a key test, with the new chair holding the first press conference, and the dot plot and policy signals will determine whether the rebound can continue. However, from a medium-to-long-term perspective, the three major underlying logics of continued gold purchases by global central banks, the global de-dollarization trend, and the normalization of the US fiscal deficit will still provide solid support for gold prices.
Xia Yingying also cautioned about risks, noting that the US-Iran situation still holds uncertainty, which may limit the short-term rebound's upside. According to the 14-point memorandum of understanding disclosed by Iran, the US side has promised to lift the maritime blockade, suspend oil sanctions, and withdraw troops. However, there are discrepancies in the statements from both sides regarding core terms such as the amount of unfrozen funds and the details of troop withdrawal. The final terms will only become clear after the signing on June 19th. In the short term, gold needs to watch the resistance zone between $4,400 and $4,500 per ounce.
"Overall, the most severe phase of the macro environment for precious metals may have passed," Xia Yingying stated. The marginal easing of the US-Iran situation, combined with the fading liquidity impact from the SpaceX listing, has increased the allocation value of precious metals. Strategically, she suggests considering long positions on dips after a pullback. For the week, it is recommended to closely focus on the forward guidance on monetary policy from the Federal Reserve's interest rate decision early Thursday morning.
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