Gold prices took a heavy hit this week. Despite signs of cooling US inflation data, geopolitical risks and interest rate expectations continued to deter bulls. Spot gold fell by over $100 in a single week, testing below the $4,000 psychological level four times during intraday trading, with a low near $3,950. Although there was some recovery later, the weekly chart remains distinctly bearish.
Market focus initially centered on the US June inflation report. The year-over-year rise in the Consumer Price Index was lower than expected, briefly pushing gold prices back above $4,050. However, subsequently released Producer Price Index and retail sales data indicated that US economic resilience remains intact, causing US Treasury yields to rise. A stronger dollar suppressed gold's rebound potential. Meanwhile, tensions in the Middle East pushed international oil prices back above $80. Investors worry that rising energy prices could reignite global inflation, forcing the Federal Reserve to keep rates elevated for longer.
Wall Street institutional sentiment has shifted significantly. The latest market survey shows that nearly 80% of surveyed analysts expect gold prices to continue falling next week, with only a tiny fraction bullish on gains. Retail investor attitudes are more divided, with bullish and bearish ratios close. Some market participants point out that buy-the-dip interest continues to emerge near the $4,000 level, and gold purchases by central banks around the world also provide certain support. This area may be in a consolidation phase before a new round of market moves.
However, risk warnings remain. A strategy head warned that if tech stock sell-offs intensify leading to worsened market risk sentiment, a comprehensive sell-off could occur, and gold would not escape unscathed. Another institutional view believes that energy price volatility triggered by the Middle East conflict makes rate hike concerns difficult to dissipate in the short term, limiting rebound space. From a technical perspective, some indicators show gold has entered oversold territory, trend-following fund position unwinding is largely complete, and net long positions have dropped to multi-year lows. Historical patterns indicate gold often forms seasonal lows around August; subsequent central bank meetings or changes in geopolitical situations could become new catalysts.
Regarding future trends, market opinion remains divided. Some analysts believe the downward trend has not ended; if risk appetite improves, gold prices might fall further before September. Others suggest that current low-level buying signs are obvious, and declining volatility means a breakout move is approaching. Next week, important US economic data is relatively limited; market attention will turn to the European Central Bank interest rate decision and Purchasing Managers' Index data. If tensions in the Strait of Hormuz escalate pushing oil prices higher, the US dollar and Treasury yields may pressure gold again; conversely, if economic data weakens and the market reprices expectations for the Fed ending tightening, gold prices are expected to launch a rebound based on support levels.
