Gold Market Review and Key Insights: Last week, London spot gold closed at $4,539 per ounce (down 3.7% week-over-week), while domestic AU9999 gold closed at 1,006 yuan per gram (down 2.9% week-over-week).
The U.S. Treasury market experienced a broad sell-off last week, with yields across maturities rising strongly, significantly pressuring gold prices. For the week ending May 15, the 30-year Treasury yield broke through the psychological 5% barrier. The 10-year yield surpassed 4.5% for the first time since June 2025, and the policy-sensitive 2-year yield climbed above 4%, reaching an 11-month high. Treasury yields can be viewed as the opportunity cost of holding gold; therefore, their rise contributed to last week's decline in gold prices.
The primary catalyst for the rise in Treasury yields was U.S. inflation data that comprehensively exceeded expectations. Data released on May 12 showed that the U.S. April CPI rose 3.8% year-over-year, higher than the market forecast of 3.7%, marking the highest level since May 2023. Core CPI increased 2.8% year-over-year, also exceeding the expected 2.7%. The following day's PPI data was even stronger, with April PPI surging 6.0% year-over-year, far surpassing the market expectation of 4.8% and recording the largest increase since December 2022. Core PPI rose 5.2% year-over-year. Following these two stronger-than-expected inflation reports, market-implied probability of a Federal Reserve rate hike before year-end has risen above 40%.
However, upon examining the components of inflation, the sharp increases were primarily in categories like food and oil prices, which are subject to one-off disruptions from the Middle East situation. The rebound in the housing component stems from data distortions caused by last year's government shutdown. Most other components continue to show a downward trend. Therefore, against a backdrop of moderating wage inflation, cooling soft employment data, and the incoming Wash administration, the Federal Reserve may still have room for more interest rate cuts than expected in the second half of the year.
Looking ahead, the factors supporting gold's medium to long-term trend remain intact: Under the global trend of "de-dollarization," demand for gold purchases from central banks in emerging markets, represented by China and Poland, continues to be released, with global central banks making net purchases of 244 tons in the first quarter. High U.S. fiscal deficits, with debt interest payments exceeding military spending, pose a long-term erosion to dollar credit. As a strategic asset hedging against "fragmentation risks in the international order" and "sovereign currency credit risks," gold's value for portfolio diversification remains solid.
Key signals for gold investment focus in the coming week: (1) Developments in the Middle East situation and oil price movements; (2) Inflation changes in economies like Japan and Europe.
Related Products: • Huaan Gold ETF (518880) / Link A (000216) / Link C (000217) • Huaan Gold Stock ETF (159321)
Comparison of RMB-denominated Gold and International Gold Price Trends: Data Source: Wind, Huaan Fund, as of May 15, 2026
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