- Spot gold experienced significant fluctuations last week, dropping over 2.5% in total, marking the fifth consecutive week of weekly declines. However, it successfully held the key technical support level of $4,000 per ounce by the end of Friday.
- Both the U.S. May CPI and PPI macroeconomic data exceeded market expectations, with rising inflation pressures reinforcing the market's risk pricing for the Federal Reserve (Fed) to maintain a normalized tightening path.
- The global market's core focus has fully shifted to the upcoming Federal Open Market Committee (FOMC) meeting next week, which will be the policy debut of the new Fed Chair, Walsh.
Macro Inflation Indicators Exceed Expectations, Triggering Asset Valuation Adjustments
The U.S. May Consumer Price Index (CPI) released last week rose 4.2% year-on-year, marking the largest increase since 2023. The subsequent Producer Price Index (PPI) rose 6.5% year-on-year, also reaching the highest level since November 2022. The macro-level inflation stickiness, combined with previous geopolitical situations pushing up international energy prices, led to multiple negative factors resonating. The market's pricing for the tightening cycle was significantly reassessed, with gold futures and spot encountering concentrated sell-offs midweek, breaking below the $4,200 per ounce mark and briefly dipping to $4,023.10 per ounce, showing clear signs of phase pressure.
Key Technical Support Confirmed and Divergence in Bull and Bear Valuations
Although gold prices recorded a fifth consecutive week of decline, the successful defense of the $4,000 per ounce level is seen by most institutions as a signal of strategic buying returning. Some analysts point out that the rebound in gold prices after hitting a phase low indicates that long-term investors are using the pullback to establish new positions. However, the technical trend remains cautious, as gold prices have yet to effectively regain the key resistance level of $4,250 per ounce. If it fails to stabilize above the core moving averages, the pricing framework for gold assets will continue to face a repeated bottoming process in the short term.
Wall Street Professional Sentiment Unusually Shifts to Neutral
According to the latest Kitco Gold Market Weekly Survey, Wall Street professional analysts show an unusual marginal change in attitude. Among the 17 sell-side and buy-side professionals surveyed, only 24% hold a bullish outlook, 12% hold a bearish outlook, while as much as 65% choose to remain neutral. This indicates that the high volatility of high-frequency data has prompted financial institutions to shift from a previous unilateral bias to waiting for a clear policy direction. In contrast, retail investor sentiment is relatively pessimistic, with nearly half holding a bearish view, creating a mismatch between institutional caution and retail bearish expectations.
Cross-Asset Linkage Predictions and Forward Pricing Discrepancies
Due to the uncertainty in the global macro environment, major research institutions show a clear divergence in long and short cycle predictions for the future trend of gold. Analysts with a cautious stance point out that if U.S. Treasury yields and the dollar index continue to strengthen under tightening expectations, gold prices may still risk approaching the $3,000 to $3,300 per ounce range in the coming months. Meanwhile, CPM Group expects gold prices to operate within a wide range of $3,800 to $4,650 per ounce in the short term. Conversely, some long-term bulls believe this adjustment is merely a technical correction in a long-term bull market cycle, and if the bottom is established, there is still potential to test higher dimensions in the future.
Walsh's Policy Debut Becomes the Core Variable for the Next Stage
Looking ahead to next week, the core of global market volatility will be entirely dominated by the Fed's interest rate meeting. This is not only Walsh's first rate decision since taking over as Fed Chair but also his first release of the Summary of Economic Projections (SEP) and dot plot. If Walsh delivers strong hawkish rhetoric at the press conference to address inflation, gold may retest the $4,000 per ounce support level in the short term. Conversely, if his rhetoric is relatively balanced and releases moderate policy marginal changes, it could drive gold prices to start an oversold rebound. Meanwhile, successive central bank rate decisions from multiple countries will also indirectly amplify gold's pricing volatility through exchange rate channels.
