International gold prices continue to decline, falling below key technical support levels, with various research institutions releasing reports indicating that for gold prices to rebound, it would require the U.S. and Iran to reach a peace accord, a decrease in international oil prices, and a clear signal of interest rate cuts from the Federal Reserve.
On June 11th, international gold prices continued to drop, approaching $4,100 per ounce on the influential gold benchmark pricing market, Comex in New York. Since June 5th, gold prices have fallen for five consecutive trading days.
On June 5th, gold prices plummeted by 3.26%, closing at $4,354 per ounce, marking the largest single-day percentage decline since March 26th. Moreover, breaking through the “200-day moving average” key technical level, gold has officially entered a technical bear market.
The 200-day moving average is a long-term trend line formed by adding the closing prices of the past 200 trading days and averaging them. It represents the average holding cost of all market participants over the past year-long trading cycle.
On the other hand, the stronger-than-expected non-farm payroll report released by the U.S. last week supported market expectations of an interest rate hike by the end of the year, keeping the dollar exchange rate near its highest level in nearly two months and limiting upward momentum in gold prices.
By June 11th, various investment and research institutions had released reports within a week.
In a recent report, Citibank revised its future gold price target for the next three months from $4,300 per ounce to $4,000 per ounce. It stated that due to the continued closure of the Hormuz Strait, gold prices might even fall to $3,500 per ounce.
Yardeni Research stated in a report that the current gold pullback reflects insufficient market demand for hedging, which is not enough to counterbalance the drag from the tightening financial environment and the uncertainty in major central bank policy paths. However, gold prices are expected to find support around $4,000 per ounce.
Standard Chartered’s report indicated that as investors start selling losing gold ETF positions, gold prices may face greater downward pressure in the short term, with the next critical technical support level potentially dropping to $4,100 per ounce.
The report pointed out that the correlation between investment demand in the ETF market and real interest rates is closer than the correlation with other structural factors in the physical market. Rising inflation is forcing the market to reflect the expectation of a possible interest rate hike by the Federal Reserve by the end of the year, pushing up real interest rates and increasing the opportunity cost of holding non-yielding assets like gold.
Furthermore, calculated at the recent low price of $4,250 per ounce, at least 270 tons of gold ETF holdings have fallen into losses; and if calculated on a FIFO basis, this year’s loss position could even reach 465 tons. If gold prices drop to $4,000 per ounce, loss holdings may increase to 298 tons, potentially triggering more investors to sell and exacerbating selling pressure in the market.
A research report from global investment bank Jefferies pointed out that there has been extreme “differentiated trends” in the commodities market this year, with copper futures up by approximately 15.6% since the beginning of the year, while gold has only risen by about 3.5% during the same period.
The report analyzed that gold’s recent weakness stems mainly from macroeconomic headwinds, rising U.S. interest rates, market expectations of prolonged tightening policies, reducing the allure of non-yielding assets. Meanwhile, the strength in oil prices has complicated inflation prospects, making major central banks more cautious in releasing early signals of easing. A strong dollar further pressures non-U.S. buyers as the cost of buying gold increases.
Jefferies maintains its long-term optimistic outlook, keeping its gold price forecast for 2027 at $5,200 per ounce unchanged.
However, Jefferies emphasized that for gold to resume its upward trend, it cannot solely rely on short-term market sentiment and must await three substantial changes in the macroeconomic environment.
First, the formal resolution of the conflict between the U.S. and Iran would significantly reduce the market’s “geopolitical risk premium” and restore stability to the chaotic energy market.
Second, a drop in oil prices would directly alleviate global inflationary pressures, helping monetary policy to loosen and fully open the door to “accommodative policies.”
Lastly, a green light from the Federal Reserve for rate cuts would lower real interest rates, restoring gold’s attractiveness as a hedging asset.