International gold prices experienced another sharp decline on Tuesday, briefly falling below the key $4,100 per ounce level.
Data from Wind shows that on June 23rd, spot gold (London spot gold) fell over 2%, breaking below $4,100 per ounce. The decline reached as much as 2.16%, with the price hitting a low of $4,090.50 per ounce. Concurrently, spot silver dropped nearly 5%, falling below $61.80 per ounce. In the futures market, COMEX gold fell as much as 2.25% to $4,108.2 per ounce, while COMEX silver declined 5.69% to $61.85 per ounce.
By the time of reporting, the spot gold price had recovered to above $4,100, with its losses narrowing to 1.77%.
In the domestic market, by the close on June 23rd, the Shanghai gold futures 2608 contract settled at 897.90 yuan per gram, down 2.04%. Its year-to-date losses have now reached 8.85%.
Simultaneously, the A-share precious metals sector suffered significant losses on Tuesday. By the market close, several stocks, including Shandong Gold International, Zhongjin Gold, and Chifeng Gold, had hit their daily downward limit.
Following unexpectedly hawkish signals from the new Federal Reserve Chair, Kevin Warsh, major Wall Street institutions have collectively lowered their gold price forecasts.
A team of commodity strategists led by Michael Widmer at Bank of America wrote in a research report last Friday, "Following the FOMC meeting, the risk of a Fed rate hike this year has increased significantly. It is difficult for gold to stage a substantial rally in the short term."
Widmer stated that the current inflation situation remains concerning and is likely to force further monetary policy tightening. Bank of America's previous gold price target of $6,000 per ounce now appears difficult to achieve.
The strategist pointed out that the weakness in gold prices is closely linked to the rising probability of a rate hike before year-end. "In other words, if monetary policy shifts from 'rate cuts against an inflationary backdrop' to further tightening, all else being equal, gold's upside potential would be reduced by approximately 50%."
Commenting on the recent decline in gold prices, Liu Tingyu, fund manager of the Yongying Fund Gold Stock ETF, noted that while the US and Iran have signed a memorandum of understanding electronically, Israel's continued attacks on Lebanon mean the Strait of Hormuz could potentially close again. Furthermore, the market interpreted Warsh's debut as a hawkish signal, leading to a temporary increase in traders' expectations for Fed rate hikes, which triggered another round of adjustments in gold and gold stocks.
"However," Liu Tingyu added, "the trend of global central bank gold purchases continues. The logic of de-dollarization and weakening US dollar credit continues to support the long-term allocation value of gold. Fundamentally, gold stocks act as a profit lever for the gold price, not a linear reflection of it."
Liu Tingyu further indicated that looking ahead, rate hike expectations and geopolitical tensions may amplify market volatility. However, if oil prices subsequently retreat and inflationary pressures ease, expectations for monetary policy easing could once again support gold's financial attributes. "From a medium to long-term perspective, the underlying logic of US deficit expansion, global de-dollarization, and central bank gold demand remains unchanged. The risk-reward profile of gold stocks has improved following this adjustment."
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