Gold prices experienced a sharp decline, with the London spot price falling below the $4,000 per ounce mark on June 24, reaching its lowest level since early November 2025.
By 11:00 AM on June 25, the international gold price continued its downward trend during Asian trading hours, with London spot gold quoted at $3,969 per ounce, down 0.50% for the day and hitting an intraday low of $3,962.
The significant drop in international gold prices on the evening of June 24 was directly triggered by U.S. Treasury Secretary Scott Bessent's comments in support of a strong U.S. dollar, according to Wang Shenghao, a senior analyst at Zhongzhou Futures. This statement propelled the U.S. dollar index to surge rapidly, reaching a new high since May of last year, while U.S. Treasury yields rose simultaneously, increasing the holding cost for gold and putting downward pressure on its price.
On June 25, U.S. Treasury Secretary Scott Bessent stated that Federal Reserve interest rate cuts do not necessarily lead to a weaker dollar and that a strong dollar can be maintained even during a rate-cutting cycle. Bessent explained that if the Fed cuts rates due to receding inflation while the domestic economy remains robust, overseas capital will continue flowing into the United States, allowing the dollar exchange rate to remain stable. However, this outcome entirely depends on the reasons behind the Fed's rate cuts.
During the interview, Bessent also indicated that the U.S. economy is expected to return to a 3% growth trajectory this year. He suggested that with the easing of tensions with Iran, inflation will fall back to the Fed's target level, and artificial intelligence has the potential to at least double productivity. He also defended the government's ongoing negotiations with Iran and its handling of frozen assets.
Wang Shenghao noted that the stronger-than-expected U.S. non-farm payrolls addition of 172,000 in May and the year-over-year CPI reading of 4.2%, a three-year high, demonstrated unexpected economic resilience and sticky inflation, directly shifting market policy expectations. The market has rapidly pivoted from betting on rate cuts at the beginning of the year to pricing in rate hikes within the year, suppressing the valuation logic for non-yielding assets like gold and fueling a sustained rise in bearish sentiment.
Wang analyzed that the core driver behind the sharp rise in the U.S. dollar index is the shift in Federal Reserve policy expectations. The warming expectations for rate hikes have pushed up U.S. Treasury yields, enhancing the appeal of dollar-denominated assets and prompting a continuous flow of international funds back to the United States.
Concurrently, monetary policies in non-U.S. economies are generally more accommodative, leading to widespread weakness in non-U.S. currencies, which passively bolsters the dollar exchange rate. Coupled with a retreat in global risk appetite, the dollar's safe-haven attributes have come into play, driving the dollar index to new highs for the period.
Wang further explained that the recent sustained decline in gold is the result of a gradual accumulation of previous negative factors. Gold prices had accumulated substantial gains earlier, leading to significant profit-taking pressure. Following the implementation of the U.S.-Iran de-escalation, geopolitical safe-haven premiums have been continuously unwound, shifting market sentiment. A sell-off in U.S. tech stocks prompted investors to sell gold as a source of supplementary liquidity, causing it to lose its safe-haven function and resulting in the unusual scenario of both U.S. stocks and gold declining simultaneously.
Jing Chuan, a guest professor at Xi'an Jiaotong University, added that the core trigger for this round of sharp gold price declines is the Federal Reserve's hawkish signals combined with a significant strengthening of the U.S. dollar. The June FOMC dot plot showed that half of the officials anticipate rate hikes within the year, with the market-implied probability of a December rate hike surging from 61% to 86%. The dollar index hitting a one-year high has caused the opportunity cost of holding the non-yielding asset gold to soar. Meanwhile, the 60-day negotiation window agreed upon by the U.S. and Iran has led to a temporary easing of Middle Eastern geopolitical risks, causing safe-haven premiums for precious metals to continuously converge.
Notably, recent market fund flows have shown a temporary shift. On June 23, the world's largest gold ETF, SPDR, saw a single-day outflow exceeding 4.5 tonnes, following cumulative outflows of over 58 tonnes in the preceding four consecutive weeks. Major institutions have been reducing their gold allocation ratios, yields on gold-linked structured deposits have been lowered, and there are clear signs of short-term speculative capital exiting.
Compared to last year's fervent pursuit, the market has indeed cooled, but it does not represent a trend of capital leaving the sector, according to Wang. Last year, gold benefited from a triple resonance of geopolitical conflict, central bank purchases, and rate cut expectations, leading to sustained capital inflows. This year, the reversal in policy expectations, coupled with capital diversion towards AI tech stocks, has temporarily reduced its allocation appeal. However, the long-term logic of central bank gold buying remains intact, and ETFs have seen weekly inflows before, suggesting this is more likely short-term capital maneuvering.
It is reported that gold surged 250% from $1,600 per ounce at the beginning of 2024 to $5,600 per ounce, with its high valuation having already priced in all positive factors, leading to concentrated profit-taking. Jing Chuan stated that the sustained decline in international gold prices has also reversed the enthusiasm in China's domestic gold investment market, with the previously booming investment sentiment cooling abruptly. Entering the second quarter, domestic gold ETFs have experienced large-scale redemptions, completely reversing the situation of attracting funds across the board at the beginning of the year, with most products now in a state of continuous net capital outflow.
Furthermore, although the Federal Reserve maintained the interest rate at 3.5%–3.75% in June, its stance has turned significantly more hawkish. The dot plot indicates that half of the officials expect rate hikes within the year, official forward guidance on easing has been removed, and the new Fed Chair, Kevin Warsh, emphasized the necessity of bringing inflation back down to 2%. Market pricing has shifted rapidly, with the probability of a December rate hike rising above 80%, and expectations for rate cuts have been essentially eliminated.
If inflation continues to rise beyond expectations, the probability of Fed rate hikes in September and December will further increase, Wang noted. These rate hike expectations are precisely the core reason for the recent declines in both gold prices and U.S. stocks. As a non-yielding asset, rising interest rates directly suppress gold's valuation. High-valuation tech stocks are highly sensitive to interest rates, and rising discount rates compress their valuations. Combined with pressure on liquidity expectations, this has triggered a degree of selling.
As gold prices continue to fall, the influencing factors are drawing external attention. Wang Shenghao stated that the core factor remains the path of Federal Reserve monetary policy. Subsequent U.S. core data on inflation, employment, and PMI will directly impact rate hike expectations and are key variables for gold price movements. Data consistently exceeding expectations will strengthen rate hike expectations and keep pressure on gold prices, while a moderation in data could ease policy expectations and allow gold prices to potentially recover.
Wang emphasized that other key influencing factors should not be overlooked: the evolving geopolitical situation, where escalating conflicts could provide safe-haven support for gold; continued gold purchases by global central banks, constituting a long-term supportive force for prices; the highly negative correlation between the movements of the U.S. dollar and U.S. Treasury yields with gold prices; and the tendency for gold to be sold first as a liquidity source during sharp volatility in global risk assets, with its safe-haven attributes likely to reassert themselves once market conditions stabilize.
Regarding the future trajectory of gold prices, Wang suggested that if the $4,000 level is decisively breached, it could trigger further selling in the short term. The first support level below is in the $3,850–$3,900 range, corresponding to the consolidation platform from the second half of 2025. Stronger support lies between $3,700 and $3,750, which aligns with the 1x extension of the first wave of this decline and the annual moving average support. Currently, some bottom-fishing capital has started to enter at lower levels, and the battle between bulls and bears around the $4,000 psychological level is intense, meaning it may not be decisively broken in the short term.
Wang added that silver price volatility is significantly more elastic than gold's. If gold continues to weaken in the short term, silver may have further downside potential, with strong support located in the $58–$59 range. In terms of trading strategies, conservative investors might consider waiting on the sidelines for clearer stabilization signals. Contrarian traders could consider testing small long positions near $3,900 for gold and $59 for silver, with strict stop-losses. Trend traders might wait for market expectations to materialize and technical patterns to stabilize before positioning, with short-term operations primarily focused on selling into rallies.
Meanwhile, Xu Yaxin, a researcher at the Beijing Gold Economic Development Research Center, stated that current market pricing logic has shifted towards potential Federal Reserve rate hike expectations, putting pressure on gold prices and causing a breakdown, which has already priced in the negative impact of anticipated Fed hikes. Additionally, U.S. employment data performance is crucial; the stronger the resilience of the job market, the less room the Fed has for monetary policy easing.
However, Xu noted that if employment data continues to weaken later on, rate hike expectations will be difficult to sustain, and international gold prices would likely stabilize first. From a technical perspective, after losing the $4,000 level, the next key support zone is the low range of $3,886–$3,915 formed on October 28 of last year, which also served as the core adjustment bottom after gold's surge last October.
Jing Chuan also commented that after international gold prices fell below $4,000, Deutsche Bank calculations suggest they could potentially test $3,800 under extreme scenarios, while Goldman Sachs lowered its year-end target to $4,900 (from $5,400 originally), with a base case scenario seeing prices potentially falling to $4,440 by year-end. The core stabilization range for gold prices could be the $3,800–$4,000 dense trading zone from 2025. Silver, with its stronger industrial attributes, may continue to underperform gold amid expectations of an economic slowdown.
Comments