On July 1st, international gold prices fell, with the spot price dropping below the key $4,000 per ounce level during the trading session. As of 3:05 PM Beijing time, gold futures for August delivery on the COMEX were trading at $3,979.80 per ounce, down 1.47% for the day. The decline was attributed to rising uncertainty in US-Iran negotiations, heightened market expectations for a Federal Reserve rate hike this year, and a subsequent rise in US Treasury yields and the US Dollar Index, which pressured precious metals.
Since the start of 2026, the international gold price has experienced significant volatility, rallying sharply to a record high early in the year before undergoing a rapid decline in the middle of the year. The price has now fallen nearly 30% from its peak for the year. The rally continued from late 2025 into the new year, with the COMEX front-month gold futures contract hitting a historic intraday high of $5,626.8 per ounce on January 29th. The cumulative gain for January and February exceeded 20%.
What Caused the Gold Price Pullback?
A new round of conflict in the Middle East that erupted in late February pushed international oil prices higher, sparking global inflation concerns and leading to a downward trend in gold prices. The decline accelerated in June. On June 24th, the international gold price fell below the $4,000 per ounce mark for the first time this year, touching an intraday low of $3,975.7 per ounce.
Several international institutions note that this pullback in gold prices is the result of multiple factors. These include increasing expectations for monetary tightening in Western economies and significant outflows from gold Exchange-Traded Funds (ETFs). As a non-yielding asset, the price of gold is typically highly sensitive to US Treasury yields and monetary policy. Rising interest rates directly increase the opportunity cost of holding gold.
Since June, central banks like the European Central Bank and the Bank of Japan have announced interest rate hikes. Analysts point out that these moves have dampened bullish sentiment in the precious metals market, putting downward pressure on gold prices. Weak demand for gold ETFs and the capital-draining effect of the booming artificial intelligence (AI) industry have also contributed to gold's weakness. Some analysts note that the AI sector's continued outperformance, coupled with impressive capital expenditure and profit growth from tech giants, has attracted substantial capital flows into equity markets, reducing gold's appeal in asset allocation.
UBS Forecast: Gold to Rebound Toward $5,200
However, some analysts view the recent sharp decline in gold as a mid-term structural adjustment rather than the end of a long-term bullish trend. Ongoing efforts by global central banks to diversify their reserve assets continue to provide underlying support for medium to long-term gold demand. Data released by the World Gold Council in June showed that global central banks were net purchasers of 19 tonnes of gold in April, with central banks in Eastern Europe and Asia remaining steady buyers.
In a recent research report, UBS stated that it expects the international gold price to recover to around $5,200 per ounce over the next 12 months.
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