International gold prices experienced another sharp decline on Tuesday, briefly falling below the key $4,100 level.
Wind data shows that on June 23, spot gold (London Gold Spot) fell by over 2%, breaking through the $4,100 per ounce mark, with a maximum decline of 2.16% to a low of $4,090.50 per ounce. Concurrently, spot silver dropped by nearly 5% at one point, falling below $61.80 per ounce. In the futures market, COMEX gold fell by a minimum of 2.25% to $4,108.2 per ounce, while COMEX silver declined by 5.69% to $61.85 per ounce.
As of the time of writing, the spot gold price had recovered to above $4,100, with the loss narrowing to 1.77%.
In the domestic market, by the close on June 23, the Shanghai gold futures 2608 contract settled at 897.90 yuan per gram, down 2.04%, marking a year-to-date decline of 8.85%.
Simultaneously, the A-share precious metals sector suffered a significant setback on Tuesday. By the market close, multiple stocks, including Shandong Gold-Mining International, Zhongjin Gold, and Chifeng Gold, had hit their daily downside limits.
Following unexpectedly hawkish signals from new Federal Reserve Chair Kevin Warsh, major institutions on Wall Street have collectively lowered their gold price forecasts.
A report from a team of commodity strategists led by Michael Widmer at Bank of America stated last Friday, "The risk of a Fed rate hike within the year has increased substantially post-meeting. It is difficult for gold to see a significant rally in the short term."
Widmer indicated that the current inflation situation remains challenging and is likely to compel further monetary policy tightening. The bank'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' towards further tightening, all else being equal, gold's upside potential could 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 although the U.S. and Iran have signed a memorandum of understanding electronically, Israel's continued attacks on Lebanon mean the Strait of Hormuz could potentially be closed again. Furthermore, Warsh's debut was interpreted by the market as a hawkish signal, leading to a temporary increase in traders' expectations for Fed rate hikes, which triggered another adjustment in gold and gold stocks.
"However, the trend of central bank gold purchases globally continues, and the logic of de-dollarization and weakening U.S. dollar credit continues to support the long-term allocation value of gold. Gold stocks essentially act as a profit lever for the gold price, not a linear reflection of it," Liu Tingyu stated.
Liu Tingyu further explained that looking ahead, expectations for rate hikes and geopolitical tensions could amplify volatility. However, if oil prices subsequently fall and inflation 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 U.S. deficit expansion, global de-dollarization, and central bank gold demand remains unchanged. Following the adjustment, gold stocks offer better value for money."
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