- Geopolitical conflicts in the Middle East have led to a revaluation of major global assets. On Wednesday, the spot gold price recorded a 1.2% drop in a single day, closing at $4,434.30 per ounce, down approximately $53.76 from the previous trading day.
- Expectations of disruptions in energy supply have significantly increased. The benchmark price of West Texas Intermediate (WTI) crude oil in the U.S. rose by more than 2.50% during the day, combined with a 0.32% increase in the U.S. Dollar Index (DXY) to 99.53, directly suppressing the valuation of non-interest-bearing assets priced in dollars.
- In May, the U.S. ADP employment numbers increased by 122,000, exceeding expectations, while the ISM services PMI expanded to 54.5. The resilience of macroeconomic data has prompted the market to reassess the Federal Reserve's (Fed) policy path, further cooling expectations of interest rate cuts.
Geopolitical Tensions Elevate Energy Risk Premium
Military confrontations in the Middle East are showing signs of escalation. According to the latest information, Iran's attack on Kuwait has caused infrastructure damage, while the U.S. military has launched targeted defensive actions near the Strait of Hormuz. Diplomatic engagements between Washington and Tehran have yet to show substantial progress. In media interviews, Israeli officials have clearly stated that if the situation requires, the U.S. and Israel are prepared to take further measures. U.S. government officials have also signaled that if geopolitical conflicts continue to escalate, the possibility of fully resuming military actions cannot be ruled out. These geopolitical variables have directly increased the risk premium in the energy market, with the significant rise in WTI crude oil prices reflecting deep concerns about disruptions in the oil supply chain.
Reassessment of Inflation Expectations and Tightening Dollar Liquidity
The upward pressure on energy prices is being transmitted to broader inflation indicators. Against this backdrop, market concerns about a second wave of inflation have intensified. Gold is traditionally seen as a hedge against inflation, but due to its non-interest-bearing nature, its appeal is often suppressed in a macro environment where inflation expectations push up nominal and real interest rates. The U.S. Dollar Index rose for the third consecutive trading day, reaching 99.53. A strong dollar increases the purchasing costs for non-dollar holders, further constituting upward resistance in the gold market. If energy supply-side shocks persist, major global central banks may be forced to maintain a high-interest-rate environment to anchor inflation expectations.
Macroeconomic Data Validates Economic Resilience, Suppressing Rate Cut Expectations
U.S. macroeconomic data further supports a high-interest-rate environment. In the labor market, the ADP national employment numbers for May recorded an increase of 122,000, exceeding the market expectation of 117,000; the Job Openings and Labor Turnover Survey (JOLTS) data also showed an upward trend. In the services sector, the U.S. ISM services PMI rose from 53.6 to 54.5 in May, with the prices paid index climbing from 70.7 to 71.3, indicating that rising input costs, such as energy, are gradually being transmitted to the service end. New York Fed President Williams noted that current monetary policy is in an appropriate range and sees no need to adjust the benchmark interest rate in the short term. If the upcoming non-farm payroll data (market expectation of an increase of 85,000) continues to confirm the strength of the labor market, the Fed's rate cut cycle may be further delayed.
Technical Support Level Test for Spot Gold
From a technical analysis perspective, the spot gold price shows signs of marginal weakening in momentum indicators after breaking below the short-term moving average. During the day, the price briefly touched a low of $4,426 per ounce and is currently approaching the key support level of the 200-day simple moving average (SMA) at $4,422 per ounce. The Relative Strength Index (RSI) points downward, indicating that bearish forces are dominant at this point. If the gold price effectively breaks below the 200-day moving average support, market pricing may face a revaluation, with the lower support range potentially shifting down to the $4,400 mark; conversely, if it stabilizes at this level, a weak oscillation pattern may form within the current range.
