Gold Prices Plummet Amid Federal Reserve Rate Hike Expectations

The international gold price has been experiencing wide fluctuations due to multiple negative factors. The Federal Reserve's interest rate hike expectations have risen, and a series of 'hawkish' signals from overseas central banks have added pressure on gold prices.

Liu Siyuan, Chief Analyst at LeadFinance, notes that divergent market expectations regarding the Federal Reserve's interest rate hike in the second half of the year have triggered recent wide fluctuations in gold prices. The Bank of England, Bank of Japan, and European Central Bank have all sent 'hawkish' signals, driving up the US dollar index and indirectly suppressing gold performance.

Fuyi Fu, a special researcher at Suzhao Bank, points out that international gold prices have repeatedly hovered near $4,100/oz recently, with the core suppressing factor being the falling short of market expectations for Fed rate cuts, rising expectations for rate hikes instead. International geopolitical tensions have pushed up oil prices, further elevating US inflation concerns and making it harder for Fed rate hike expectations to recede.

Analysts believe that in the medium and long term, the fundamental logic for a gold bull market remains solid. Medium-to-long-term factors such as fiscal deficits, geopolitical tensions, and monetary concerns continue to support gold demand. With currency oversupply and fiscal deficit monetization, the US dollar's credit system is being challenged; coupled with frequent global geopolitical turmoil driving diversification of asset reserves, demand for gold as a safe asset continues to increase.

Liu Siyuan expects that under the scenario of a single, as-expected Fed rate hike and stable markets, in the second half of the year, gold will most likely experience wide fluctuations between $3,800/oz and $4,200/oz. Fuyi Fu believes that the long-term bullish logic is even stronger, with continued global central bank gold purchases providing long-term structural support, and rising international geopolitical uncertainty enhancing the strategic allocation value of gold.