Gold prices were besieged by geopolitical and interest rate risk sentiment, but why has the decline begun to slow?
2026-06-08 15:41:47
On Monday (June 8), spot gold continued to decline during the Asian and European sessions. After falling 3.3% on Friday, it rebounded from its low and continued to fall by 0.5%. Since gold prices broke out of the downward channel, they have continued to fluctuate and decline.
Import prices were squeezed by a triple whammy of geopolitical tensions, risk sentiment, and real interest rates. Geopolitical tensions reignited, global equity markets plummeted, and economic data pushed up real interest rates.
Early Monday morning, retaliatory clashes between Israel and Iran shattered a fragile two-month ceasefire, pushing the Middle East back to the brink of full-blown regional war.
The conflict was sparked on Sunday when Israel ignored a ceasefire request made by the United States several days earlier and launched an unannounced airstrike on the southern outskirts of Beirut. Iran immediately issued a warning of reciprocal retaliation, ultimately leading to a direct military confrontation between the two sides early Monday morning.
The spillover effects of the conflict are spreading rapidly, with the Iranian-backed Houthi rebels in Yemen officially drawn into the conflict. They have not only claimed to launch attacks on Israel, but have also made it clear that they will strike Israeli-related ships again in the Red Sea, putting the Red Sea, the Gulf of Aden, and the Bab el-Mandeb Strait, a key shipping route connecting the two, into a high-risk situation.
This move has undoubtedly exacerbated the chaos in global shipping – during the Gaza-Israel conflict, the Houthi rebels have launched more than 100 attacks, resulting in the deaths of at least nine crew members and the sinking of four ships . Their targets often have little or no connection to Israel, while the annual freight value of the Red Sea before the war was as high as $1 trillion.
As a result, the efficiency of the Suez Canal in Egypt has been severely impacted . This shipping hub connecting the Red Sea and the Mediterranean Sea still generated $10 billion in revenue in 2023 despite the overall pressure on the Egyptian economy, and is the country's core source of hard currency. Meanwhile, Saudi Arabia, which relies on exports through the Strait of Hormuz, is urgently activating its east-west oil pipeline in an attempt to mitigate risks through the Red Sea route.
The United States plays a particularly delicate role in this conflict. The White House has not responded to whether Israel coordinated with the US in its airstrikes against Iran. However, a senior US official revealed that Trump called Netanyahu on Sunday, asking him to postpone retaliatory action against the Iranian missile attack, and that he believed he had persuaded the other party to hold back.
In a previous media interview, Trump stated explicitly that Israel's military operation in Lebanon on Sunday was not coordinated with the United States, expressing a "negative attitude" towards it, and even bluntly stated that "Netanyahu has no choice, the decision-making power is mine, and all major decisions are made by me."
However, Israel's unilateral actions have clearly disrupted the US mediation process, causing negotiations between the US and Iran regarding a ceasefire agreement to stall due to the Lebanese-Israeli conflict. Furthermore, Israel's current de facto control over southern Lebanon has raised market concerns about further escalation of its military operations.
However, the support from Middle East geopolitical risks is being challenged by expectations of hawkish monetary policy triggered by strong US non-farm payroll data.
Data shows that the U.S. added 172,000 non-farm jobs in May, far exceeding the market's previous expectation of 85,000. More noteworthy is that the April non-farm payrolls figure was revised sharply upward from the initially announced 115,000 to 179,000. The combined upward revision of 93,000 in the first two months indicates that the resilience of the U.S. labor market has been systematically underestimated by previous statistics.
This much-better-than-expected non-farm payroll report has set an absolutely hawkish tone for the upcoming Federal Reserve's June policy meeting (June 16-17), not only completely ruling out the possibility of a rate cut in the short term, but also pushing the market towards a scenario of "higher interest rates for longer."
Cleveland Fed President Hammark had previously warned that "current monetary policy may not be tight enough to bring inflation down to 2%", and the strong May employment data and upward revision of the previous value provided hawkish officials with the most solid confidence.
The clashes between Iran and Israel have not yet violated the US-Iran ceasefire agreement, and the US attitude remains very restrained. This shows that Iran is indeed in control of the peace talks, and the geopolitical outlook remains optimistic.
Strong US non-farm payrolls do not necessarily mean an interest rate hike, as the AI industry is experiencing severe layoffs and the service sector is seeing short-term prosperity due to disruptions such as the World Cup.
Finally, the impact of the sharp correction in the equity market on gold will gradually weaken. In conclusion, gold prices will continue to decline, but the decline will likely slow down.
From a technical perspective, gold prices have rebounded after hitting a bottom, but are still moving within a downward channel. After breaking below the lower channel line today, prices quickly rebounded, and there is currently strong support around 4100-4200.
(Spot gold daily chart, source: FX678)
At 15:40 Beijing time, spot gold is currently trading at $4304 per ounce.
Import prices were squeezed by a triple whammy of geopolitical tensions, risk sentiment, and real interest rates. Geopolitical tensions reignited, global equity markets plummeted, and economic data pushed up real interest rates.
Early Monday morning, retaliatory clashes between Israel and Iran shattered a fragile two-month ceasefire, pushing the Middle East back to the brink of full-blown regional war.
The conflict was sparked on Sunday when Israel ignored a ceasefire request made by the United States several days earlier and launched an unannounced airstrike on the southern outskirts of Beirut. Iran immediately issued a warning of reciprocal retaliation, ultimately leading to a direct military confrontation between the two sides early Monday morning.
Conflict spillover: Shipping routes are at high risk?
The spillover effects of the conflict are spreading rapidly, with the Iranian-backed Houthi rebels in Yemen officially drawn into the conflict. They have not only claimed to launch attacks on Israel, but have also made it clear that they will strike Israeli-related ships again in the Red Sea, putting the Red Sea, the Gulf of Aden, and the Bab el-Mandeb Strait, a key shipping route connecting the two, into a high-risk situation.
This move has undoubtedly exacerbated the chaos in global shipping – during the Gaza-Israel conflict, the Houthi rebels have launched more than 100 attacks, resulting in the deaths of at least nine crew members and the sinking of four ships . Their targets often have little or no connection to Israel, while the annual freight value of the Red Sea before the war was as high as $1 trillion.
As a result, the efficiency of the Suez Canal in Egypt has been severely impacted . This shipping hub connecting the Red Sea and the Mediterranean Sea still generated $10 billion in revenue in 2023 despite the overall pressure on the Egyptian economy, and is the country's core source of hard currency. Meanwhile, Saudi Arabia, which relies on exports through the Strait of Hormuz, is urgently activating its east-west oil pipeline in an attempt to mitigate risks through the Red Sea route.
The US Role: Trump's "Dominance" and the Dilemma of Mediation?
The United States plays a particularly delicate role in this conflict. The White House has not responded to whether Israel coordinated with the US in its airstrikes against Iran. However, a senior US official revealed that Trump called Netanyahu on Sunday, asking him to postpone retaliatory action against the Iranian missile attack, and that he believed he had persuaded the other party to hold back.
In a previous media interview, Trump stated explicitly that Israel's military operation in Lebanon on Sunday was not coordinated with the United States, expressing a "negative attitude" towards it, and even bluntly stated that "Netanyahu has no choice, the decision-making power is mine, and all major decisions are made by me."
However, Israel's unilateral actions have clearly disrupted the US mediation process, causing negotiations between the US and Iran regarding a ceasefire agreement to stall due to the Lebanese-Israeli conflict. Furthermore, Israel's current de facto control over southern Lebanon has raised market concerns about further escalation of its military operations.
Non-farm payroll data triggers hawkish expectations from the Federal Reserve, putting short-term pressure on gold prices?
However, the support from Middle East geopolitical risks is being challenged by expectations of hawkish monetary policy triggered by strong US non-farm payroll data.
Data shows that the U.S. added 172,000 non-farm jobs in May, far exceeding the market's previous expectation of 85,000. More noteworthy is that the April non-farm payrolls figure was revised sharply upward from the initially announced 115,000 to 179,000. The combined upward revision of 93,000 in the first two months indicates that the resilience of the U.S. labor market has been systematically underestimated by previous statistics.
This much-better-than-expected non-farm payroll report has set an absolutely hawkish tone for the upcoming Federal Reserve's June policy meeting (June 16-17), not only completely ruling out the possibility of a rate cut in the short term, but also pushing the market towards a scenario of "higher interest rates for longer."
Cleveland Fed President Hammark had previously warned that "current monetary policy may not be tight enough to bring inflation down to 2%", and the strong May employment data and upward revision of the previous value provided hawkish officials with the most solid confidence.
Summary and Technical Analysis:
The clashes between Iran and Israel have not yet violated the US-Iran ceasefire agreement, and the US attitude remains very restrained. This shows that Iran is indeed in control of the peace talks, and the geopolitical outlook remains optimistic.
Strong US non-farm payrolls do not necessarily mean an interest rate hike, as the AI industry is experiencing severe layoffs and the service sector is seeing short-term prosperity due to disruptions such as the World Cup.
Finally, the impact of the sharp correction in the equity market on gold will gradually weaken. In conclusion, gold prices will continue to decline, but the decline will likely slow down.
From a technical perspective, gold prices have rebounded after hitting a bottom, but are still moving within a downward channel. After breaking below the lower channel line today, prices quickly rebounded, and there is currently strong support around 4100-4200.
(Spot gold daily chart, source: FX678)
At 15:40 Beijing time, spot gold is currently trading at $4304 per ounce.
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