Driven by Three Major Negative Factors, Gold Continues Its Weak Trend

　　Source: Xinhua Finance

　　Xinhua Finance, Beijing, June 25 - Precious metals in overseas markets plummeted overnight. Spot gold dropped nearly 3% in a single day, breaking below the $4,000/oz mark, while spot silver fell more than 8% intraday. Both hit their lowest levels in thirteen months. In the short term, under the pressure of three major bearish drivers, gold prices are continuing to probe lower, maintaining a bearish trend.

　　On the fundamentals, the three main drivers affecting gold price fluctuations during the day are as follows:

Of the 19 FOMC members in June, nine support at least one rate hike before 2026, and the market is betting the probability of a hike in September has surged to 70%, with rate cut expectations almost eliminated. The yield on the 10-year US Treasury stabilized above 4.50%, sharply increasing the cost of holding non-yielding gold. The US Dollar Index climbed above 101.8, which directly "suppresses" dollar-denominated gold prices, while physical buying overseas contracted accordingly. The US and Iran reached a consensus on the Strait of Hormuz, with the US granting a 60-day sanctions waiver, causing oil prices to fall. Previous buying on the back of geopolitical tensions exited collectively. At the same time, global gold ETFs recorded five consecutive weeks of net redemptions, while long positions on COMEX were rapidly closed, triggering programmed stop-losses and exacerbating the decline.

　　Overall, this round is a result of the combined resonance of “monetary policy + exchange rates + geopolitics + liquidity”—four major bearish factors, so simply trying to catch the bottom is still risky. The key focus this week will be whether PCE data can ease the “rate hike narrative” and whether central banks will step in to support around the $3,950–4,000 level; the former determines direction, while the latter only supports but cannot reverse the bearish trend.

　　From a technical perspective, gold prices continued their descent yesterday. On the weekly chart, gold remains in a bearish pattern, highlighting the current weakness. On the daily chart, several key moving averages are suppressing the price, and currently, gold is trading below this week’s pivotal line at $4,220/oz. The indicators across multiple timeframes also suggest that bears have the advantage at present, so selling into rallies is the main trading strategy, but avoid blindly chasing the downside, as there could be a weak rebound in the short term. First support is near $3,959/oz; if this is effectively broken, support shifts to around $3,796/oz. On the upside, resistance is near $4,057/oz, and if breached, resistance moves up to the pivotal $4,220/oz area.

Editor: Zhu Henan