- After falling below the $4,500/ounce mark, the spot gold price stabilized around $4,540/ounce during trading. Previously, oil prices hit a nearly two-week high due to a drone attack on a UAE nuclear power plant and strong statements from U.S. President Trump against Iran, boosting market expectations of an inflation rebound.
- JPMorgan (JPM:US) significantly lowered its average gold price target for 2026 from $5,708/ounce to $5,243/ounce. The institution noted that gold is currently constrained by the 50-day moving average near $4,730/ounce, facing dual resistance from technical and fundamental factors.
- Global sovereign bond yields are rising rapidly, with the benchmark 10-year U.S. Treasury yield climbing to its highest level since February 2025, and the 10-year Japanese government bond yield reaching its highest since October 1996. CME Group (CME:US) data shows that the market has priced in a 50% probability of a Federal Reserve rate hike in December.
Geopolitical Premium and Supply Disruptions in the Energy Market
The sharp escalation of geopolitical tensions in the Middle East is reshaping the short-term pricing logic of commodities. The attack on the UAE nuclear facility, combined with U.S. pressure statements regarding the Iran nuclear deal negotiations, has once again made the potential blockade risk of the Strait of Hormuz a core variable in market trading. As one of the world's most important energy chokepoints, any substantial physical blockade or ongoing military friction will directly weaken the marginal elasticity of oil supply. The rapid rise in energy prices not only increases the input costs of global manufacturing but also directly alters the inflation trajectory of major economies. Mitsubishi UFJ Financial Group (MUFG:US) analysis models indicate that any prolonged stay of oil prices at current high levels will transmit through supply chain networks to core CPI, forcing monetary authorities to reassess existing policy stances.
Yield Curve Shift and Pressure on Non-Interest-Bearing Assets
With a resurgence in inflation expectations, the global fixed income market has experienced deep selling pressure. The breakthrough rise in the U.S. 10-year Treasury yield marks a shift in long-term interest rate pricing away from expectations of precautionary rate cuts, towards a repricing of inflation persistence and fiscal deficit risks. The Japanese government bond yield reaching a nearly 30-year high further confirms the end of the era of cheap global capital. OANDA's macro research suggests that the sell-off in long-term bonds implies a systemic rise in the real interest rate center. For physical assets like gold that do not generate interest income, the surge in real yields directly raises their holding costs (opportunity costs), forcing some long positions based on rate cut expectations to close out before the weekend, causing gold prices to briefly dip to their lowest level since March 30.
Repricing of Federal Reserve Rate Hike Expectations
Stronger-than-expected fundamental data is altering the Federal Reserve's (Fed) policy path expectations. Following the U.S. April PPI data showing pressure on producer prices, the market is beginning to seriously consider the tail risk of a potential restart of the tightening cycle. Quantitative tracking by Commerzbank (CBK:GR) shows that the interest rate derivatives market has already priced in a 15 basis point rise in the U.S. benchmark rate by the end of this year, with a bet on a complete 25 basis point hike by March 2027. If U.S. labor market data and consumer spending data continue to show resilience before the June FOMC meeting, the Fed may be forced to completely abandon its current dovish stance. This reversal from rate cut to rate hike expectations is the most core macro resistance currently suppressing the valuation recovery of precious metals.
Technical Game and Downward Revision of Institutional Price Targets
Under the pressure of macro headwinds, gold's technical pattern shows significant vulnerability. JPMorgan's (JPM:US) nearly $500 downward revision of the 2026 target price reflects large investment banks' cautious attitude towards medium-term gold investment demand. Observing from the daily chart level, gold prices are currently oscillating widely between the 200-day moving average at $4,340/ounce and the 50-day moving average at $4,730/ounce. The volume-price relationship on the 4-hour chart shows that after breaking the support level of $4,650/ounce, bearish momentum was temporarily released. Currently, buyers are attempting to find liquidity support below $4,500/ounce to play for a technical rebound, but if high oil prices further solidify rate hike expectations, the probability of gold prices testing the structural support at $4,350/ounce will significantly increase.
