The international gold price experienced a significant decline on the evening of June 24, Beijing time, breaking below the key $4,000 per ounce level and touching its lowest point in nearly seven months. This marks a retreat below this crucial threshold after gold first surpassed $4,000 in March 2025. As of 11 a.m. on June 25, the price was fluctuating around $3,980 per ounce. Since hitting its all-time high earlier this year, gold has undergone a cumulative correction of nearly 30%. Against a backdrop of shifting expectations toward tighter Federal Reserve policy and a persistently strong U.S. dollar, this traditional safe-haven asset is undergoing a notable valuation reassessment. Concurrently, on social media, many investors who bought at high prices or used leverage are sharing their "painful" experiences, once again highlighting the high volatility of gold and the critical importance of rational investing and risk control.
Dollar Strength and Rate Hike Expectations Form Core Pressure
Recent market performance shows the sustained strength of the U.S. dollar index is a key force pressuring gold prices. On June 24, the dollar index briefly touched 101.51, a 13-month high, having risen nearly 3% over the past two months. The rising yield on dollar-denominated assets directly increases the holding cost of non-yielding gold. The root of this dollar strength lies in a more hawkish-than-expected shift in Federal Reserve monetary policy. On June 18, Beijing time, new Fed Chair Kevin Warsh presided over his first FOMC meeting, deciding to hold rates steady. However, the dot plot showed the median rate projection for the end of 2026 was sharply revised up to 3.8% from 3.4%, implying one rate hike within the year. Nine out of nineteen officials projected at least one hike in 2026, whereas no officials held that view in March. Warsh's decision to forgo providing his own dot plot projection has also been interpreted by markets as a reduction in policy transparency, further amplifying tightening speculation. Data from the World Gold Council revealed net outflows from gold ETFs in North America and Asia in March and May, respectively, highlighting market jitters. An analyst noted that hawkish Fed expectations continue to ferment, with the CME FedWatch Tool showing the probability of a rate hike this year nearing 86%, a stark contrast to the market's earlier widespread expectation of two cuts at the start of the year. Real U.S. interest rates are more likely to rise than fall, forming the core pressure on gold prices. In the short term, barring unexpected geopolitical risks or significantly weaker economic data, gold is likely to maintain a weak and oscillating pattern.
Leveraged Investors Forced to Cut Losses
The consecutive sharp declines in gold have sparked widespread anxiety on social media. Many investors have shared their "painful" experiences after buying gold with leverage at high levels. One investor posted about starting to "buy the dip" from March this year, never having seen a paper profit. "A year's worth of savings lost 10% in a few months," they said, now struggling with whether to exit. Another investor from Guizhou, Gong Kang (pseudonym), chose to cut his losses and exit. He explained he started buying accumulated gold in January, initially seeing paper profits exceed 10%. "Market sentiment was very high then; a quick scroll through social media was filled with voices urging to 'get on the gold train'," he said, which gave him more motivation to borrow and add leverage. However, the market did not continue rising as he hoped, and gold entered a rapid correction channel, with his account value shrinking continuously. On June 24, as gold broke below $4,000, he finally succumbed to the pressure and cut his losses at a 20% decline. "Fortunately, I didn't leave behind debt, but over 120,000 yuan of my hard-earned savings is gone. With a second child about to be born and being unemployed at home, I feel extremely anxious and lost. I feel very sorry for my family," Gong Kang said, adding, "I also learned a lesson: I will never use leverage for any investment in the future." These are not isolated cases. Over the past two years, the wealth effect from gold's sustained rise attracted a large influx of retail investors. Some, unsatisfied with the steady returns from physical gold or gold ETFs, turned to futures, leveraged ETFs, or even private loans to amplify their exposure. When gold surged to record highs earlier this year, social media platforms were awash with posts "flaunting paper profits." However, as the market turned abruptly and gold prices plummeted, those paper profits evaporated quickly, exposing the risks of leveraged trading in extreme market conditions. Commenting on this phenomenon, an expert stated: "Gold investment must use idle money, not money for daily living expenses, and certainly not borrowed money or leverage. Gold is a long-term allocation asset, not a tool for short-term speculation." He added, "At this stage, institutional operations have a significant impact on short-term gold prices; blindly chasing rallies and selling on dips easily leads to being 'harvested.' The best strategy is to buy in small,分批 batches to average down the cost. What you should focus on is not tomorrow's price, but the fact that the weight of gold in your possession is increasing. You can even view it as 'storing currency in a different form.'"
Expert View: Opportunities Below $4,000, But Risk Control is Key
After breaking below the $4,000 mark, discussions about whether gold has entered a bear market have increased. However, synthesizing views from multiple institutions, most believe this decline is more of a phase correction under macro policy shocks rather than a long-term trend reversal. One fund company indicated that gold is likely to maintain an oscillating pattern in the short term. With $4,000 transitioning from a support level to a resistance level, the market may continue to seek new technical bottoms. The structural factors supporting gold—such as global central bank purchases, reserve rebalancing, and U.S. fiscal deficit pressures—have not changed due to short-term volatility. Once market expectations for Fed tightening are fully priced in, or if U.S. economic data shows unexpected weakness, gold's allocation value will re-emerge. Historically, a 30% pullback is comparable to several major corrections: a 40% cumulative drop from 1996 to 1999; an approximately 30% drop from March to November 2008; and a 45% drop from September 2011 to December 2015. Another expert noted that gold has experienced a sustained rally with substantial cumulative gains since 2024, making a correction of around 20% a normal market adjustment. As long as the overall uptrend structure remains intact, the outlook is still worth watching. However, he specifically cautioned investors to adopt a more prudent approach: "There's no need to obsess over pinpointing the exact bottom. In a high-volatility environment, maintaining patience and using idle funds to buy in small,分批 batches is a more suitable strategy at present."
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