Gold Prices Fall to 11-Week Low Before Recovery

Spot gold dropped to $4268 on June 8. This marked the lowest price since March 23. Iran and Israel traded military strikes over the weekend. The attacks pushed oil prices higher. Traders feared inflation would rise. Rate hike odds grew.

Gold recovered after Iran and Israel stopped their strikes. At the time of writing, spot gold traded at $4345. This marked an intra-day gain of 0.39%.

Earlier in the week ending June 5, gold slumped 4.67%. A strong US jobs report drove the sell-off. US employers added 172,000 jobs in May. Economists expected 88,000 jobs. The unemployment rate held at 4.3%.

Geopolitical tensions remain high. Israel and Iran exchanged strikes on Sunday and Monday. Iran warned it would target oil and gas facilities tied to Israel and the US if attacks on its energy sites continue. Yemen's Houthis also fired missiles at Israel.

Crude oil surged over 5% on Monday. It later trimmed gains to 1.5% as the strikes ended.

Inflation expectations eased. NY one-year inflation expectations fell to 3.46% from 3.64%. Economists expected 3.72%.

The US Dollar Index sat at 99.95. It was down 0.10%. Two-year US yields held steady at 4.15%. Ten-year yields rose 1 basis point to 4.53%.

Gold ETF holdings fell. Total known global gold ETF holdings hit 98.20 million ounces. This was the lowest level since February 4.

Money managers turned more bullish. Net-long positions rose by 14,410 to 111,341. This was the most bullish reading in 18 weeks.

China's central bank bought gold for the 19th straight month. It purchased 320,000 troy ounces in May.

Upcoming data includes:

  • US CPI report on June 10
  • US PPI report on June 11
  • University of Michigan Sentiment and inflation expectations on June 12
  • Eurozone Q1 GDP final data on June 5
  • China trade balance on June 9
  • China inflation data on June 10

The European Central Bank will meet on June 11. The bank is expected to raise rates by 25 basis points.

The gold outlook stays bearish. Strong US data supports the rate hike view. Support levels sit at $4250 and $4099. Resistance levels sit at $4366, $4400, and $4500. Analysts expect gold to drop toward $4000 in the coming weeks.