On Monday (July 13), spot gold continued its pullback during the European and American trading sessions, breaking out of its daily range and currently trading down 1.35% around 4063. Escalating tensions between the US and Iran weighed on gold prices, and the upcoming intense congressional questioning of the Federal Reserve tomorrow made bulls hesitant to act. Later, Trump's statement that the US government might shut down again in October, a move deeply ingrained in the public consciousness, provided a slight boost to gold prices. Last weekend, a new round of missile and drone clashes erupted between the US and Iran, with Iran striking US military outposts in the Gulf and signaling a potential blockade of the Strait of Hormuz. International oil prices rose by nearly 3% in a single day. Rising energy prices have reignited market concerns about imported inflation, further increasing expectations of continued tightening of monetary policy by the Federal Reserve. Gold is a non-interest-bearing asset, and rising interest rates directly increase the opportunity cost of holding it. Unless the risk of a breakdown in the Strait of Hormuz is substantially mitigated, the triple pressure from high oil prices, strong US Treasury yields, and a strong dollar will make it difficult for precious metals to recover. Since the deterioration of the situation in the Middle East at the end of February, the three-year bull market for gold has come to an end, with a large number of long positions taking profits and prices repeatedly testing the key support level of $4,000.

Market expectations for interest rate hikes are rising rapidly, prompting speculative funds to simultaneously reduce their positions and seek safe havens.

Geopolitical inflationary disturbances have significantly altered interest rate pricing. CME FedWatch data shows that the market is currently betting on a 71% probability of a Fed rate hike in September, a significant increase from 63% last week, with funds generally pricing in a longer tightening cycle. Positioning also reflects market caution. As of the week ending July 7, COMEX gold speculative positions decreased by 1,964 net long contracts, bringing the net long position down to 114,854 contracts, ending a three-week trend of increasing long positions, indicating that funds are actively reducing their exposure to precious metals. Multiple institutions warn that, coupled with the contraction in market liquidity during the summer, gold prices could easily break out of the existing $3,900-$4,200 trading range.

Tomorrow's House hearing will be a key catalyst for short-term market movements.

The most crucial variable in the market right now is Federal Reserve Chairman Kevin Warsh's first semi-annual monetary policy hearing before the House Financial Services Committee. The hearing will take place after the release of the June CPI inflation data, and both will jointly guide short-term interest rate expectations. These hearings are held twice a year, and the Fed Chairman is required to testify before both houses and submit the "Semi-annual Monetary Policy Report." It is a legal channel for Congress to oversee the central bank . Warsh, with a Republican background, will face intense and sharp questioning from Democratic members of Congress during the hearing. The core differences between the two sides are clear: Democrats focus on the impact of high interest rates on employment and the suppression of the real economy, questioning the continued balance sheet reduction and tough tightening policies; Republican members support a reform plan that prioritizes suppressing inflation, continues balance sheet reduction, and cuts off the central bank's fiscal support. Warsh's statements regarding interest rates and balance sheet reduction will directly affect US Treasury yields and the dollar's trajectory, indirectly determining the medium-term valuation center of gold. If Warsh maintains a hardline stance against inflation at the hearing, refrains from signaling rate cuts, and retains the option of further rate hikes, market expectations for tightening will be further strengthened, and gold will continue to be under pressure. However, if he makes a moderate statement in response to questions related to people's livelihoods, acknowledging the negative impact of high interest rates on the economy, market expectations for rate hikes will cool, the US dollar and US Treasury yields will weaken, and gold will have a chance for a phase of recovery.

Summary and Technical Analysis:

Besides the hearings, the US will release a series of macroeconomic indicators this week, including June PPI, retail sales, and initial jobless claims, providing a comprehensive picture of the US economy and inflation from the production, consumption, and employment sides. The pricing logic for gold has fundamentally shifted; the geopolitical safe-haven effect has weakened significantly, and the Fed's monetary policy stance is now the core driver of medium- to long-term market movements. With geopolitical inflation risks and congressional policy inquiries resonating, various macroeconomic data and hearing statements will continue to dominate precious metal valuation fluctuations. Technically, gold prices have recently held above the descending channel. Although geopolitical tensions have continued to put pressure on gold price rebounds, the ongoing US-Iran conflict may lead to a rebound after the negative news has been priced in. Current support is around the 0.618 Fibonacci retracement level near 4050, while resistance is near the upper trendline of the descending channel. (Spot gold daily chart, source: FX678) At 21:07 Beijing time, spot gold is currently trading at $4061.5 per ounce.