Gold prices are falling sharply during today's session, dropping by over 1.3% to levels below $4,270 per ounce, thereby erasing this year's gains. This dynamic move downward is driven by a mix of hawkish concerns and forecast revisions by key Wall Street institutions.
Key facts and market anomalies:
- Citi lowers forecasts: Citigroup has lowered its 3-month price target for gold from $4,300 to $4,000 per ounce. Analysts warn that if the blockade of the Strait of Hormuz continues and physical demand continues to fall, the price could retreat to as low as $3,500. UBS has also lowered its gold forecast from 5,900 to 5,500 for the end of this year.
- Price anomaly: Interestingly, the sell-off in gold continues, even though market expectations for US interest rate hikes have fallen slightly. Currently, futures contracts are pricing in 1 Fed rate hike by the end of the year (compared to 1.2 earlier this week, following very strong Friday NFP data).
- Oil down, Wall Street too: The declines in gold are accompanied by falling crude oil prices (WTI below $90), which theoretically should reduce inflationary pressure and support gold in the short term. Nevertheless, risk aversion dominates the markets: capital is also fleeing the stock markets, which is evident from the clear pullback of the main indices on Wall Street (US500, US100).
Gold is currently behaving unusually, ignoring the slight easing of expectations regarding the Fed's interest rate trajectory. This signals that investors may be taking profits after a multi-month rally or simply clearing positions in the face of a general cooling of sentiment on Wall Street.
What's next?
A key test for bulls in the gold market will be tomorrow's (Wednesday's) US CPI inflation data for May. If price dynamics surprise with a higher reading, pressure on gold will increase, and the market will again begin to price in a higher cost of money in the US, pushing gold even toward $4,000 per ounce. Currently, the price is holding below the 200-session average, and before the $4,000 level, we also have support in the form of a 38.2 retracement of the large upward wave since 2023. An important signal for gold could be a return of dollar weakness. At this moment, we are observing the dollar index returning to around 100, where it was previously traded at the end of March and in July and November 2025. At that time, it was always a rebound point for gold.
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