On the 24th, spot gold experienced a volatile decline, once again falling below the $4,700 per ounce mark during the session, with a drop exceeding 0.28%. Since April 17, COMEX gold has decreased by approximately 3.7%.
A specialist analyst pointed out that the recent significant pullback in gold prices stems from a reversal in capital flows triggered by a confluence of macroeconomic factors. Escalating geopolitical tensions have led to a sharp rise in energy prices, intensifying inflation concerns. This prompted the Federal Reserve to signal a more hawkish stance, causing a sudden drop in expectations for interest rate cuts, which has had a particularly noticeable impact on gold price volatility.
The analyst elaborated that gold prices exhibit a strong negative correlation with expectations for Federal Reserve rate cuts, with the core transmission channel being real interest rates. The appeal of gold depends on real interest rates and the U.S. dollar. The surge in oil prices has deepened persistent inflation concerns, severely constraining the Fed's room for monetary easing.
"Market trading logic has rapidly shifted from betting on rate cuts to pricing in the risks of sustained high rates or even tightening. The rise in short-term bond yields has significantly increased the opportunity cost of holding gold, thereby reducing its investment appeal. Any marginal downward revision in rate cut expectations quickly exerts pressure on gold prices through changes in real rates," the analyst stated.
A recent Reuters survey of economists indicates that due to energy shocks caused by war pushing up already elevated inflation, the Federal Reserve will likely wait at least another six months before implementing any interest rate cuts this year.
Regarding the current phenomenon of "rising oil prices alongside falling gold prices," which seems to contradict typical safe-haven logic, the analyst explained that the essence is a forced shift in gold's pricing dynamics from its safe-haven attributes to its financial attributes. "The sharp rise in oil prices first boosts inflation expectations, causing the main market narrative to switch to 'stagflation' and liquidity tightening. The transmission chain of rising energy costs -> persistent inflation -> stronger real rates and a stronger U.S. dollar becomes dominant. As oil trade is settled in dollars, an energy crisis increases global demand for the U.S. dollar, making it the strongest safe-haven asset and, conversely, suppressing the price of dollar-denominated gold."
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