Drops below $4,000! Bank of America urges "buy the dip" on gold, but warns "the pullback may not be over"

According to Zhitong Finance APP, concerns about inflation and interest rate outlook have resurfaced as Middle East tensions drive up oil prices and U.S. Treasury yields. Gold futures fell below $4,000/oz on Thursday, closing at the lowest level in more than eight months.

Crude oil prices retreated slightly but remained near a one-month high. Earlier, Iran stated that the Yemeni Houthi forces were prepared to close the Red Sea oil transport route if the U.S. military strikes Iran's power infrastructure, further increasing risks to Middle Eastern energy supply.

In terms of economic data, after both the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) came in below expectations this week, the U.S. Department of Commerce announced that June retail sales rose 0.2% month-on-month, but core retail sales excluding auto sales fell 0.2% month-on-month, underperforming expectations.

Forex.com analyst Fawad Razaqzada pointed out in a research report: "Even though some recent economic data has softened, persistently high energy prices will make it difficult for the Federal Reserve to take a dovish stance. For the same reason, investors currently prefer the U.S. dollar over non-yielding asset gold."

Meanwhile, Bank of America technical analysts believe that the decline in gold prices provides buying opportunities, but at the same time warn investors that the current pullback may not be over yet.

Bank of America analyst Paul Ciana stated in a report that gold could remain under pressure from August to September and added that gold prices may not find a firmer bottom until testing support at around $3,600/oz. He pointed out that this gold pullback "has only lasted 24 weeks, while the previous upward cycle lasted 121 weeks," and that the duration of the correction "is noticeably short relative to the prior uptrend."

Ciana said that the decline in gold prices will provide buying opportunities for investors and suggested that investors consider establishing positions through phased buying during dips.

The near-month Comex gold futures contract (XAUUSD.CUR) for July delivery fell 1.4% to $3,985.60/oz; the near-month Comex silver futures contract (XAGUSD.CUR) for July delivery fell 2.1% to $55.898/oz. Both respectively recorded their lowest settlement prices since November 6 and November 26 of last year.