Gold-related stocks are facing continued selling pressure. At the time of writing, Chifeng Gold (06693) fell 2.82% to HK$28.9, SD GOLD (01787) declined 2.78% to HK$22.4, TONGGUAN GOLD (00340) dropped 2.44% to HK$2, and CHINAGOLDINTL (02099) was down 2.19% at HK$147.2.

The market backdrop shows spot gold prices trending lower, having fallen below $4450 on June 5th. Since the second quarter, a resurgence in US inflation data, stronger-than-expected resilience in the job market, coupled with renewed strength in global energy prices, has led to a fundamental shift in market expectations regarding the Federal Reserve's monetary policy path.

Key Market Focus

Significant attention is focused on the US nonfarm payrolls report for May, scheduled for release later today by the Bureau of Labor Statistics. This data is viewed as one of the most critical economic indicators ahead of the Federal Reserve's June policy meeting and will directly influence market assessments of the US economic trajectory and the future path of interest rates.

Analyst Perspective on Gold's Path

Analysis suggests that gold is likely to remain in a phase of consolidation and adjustment in the short term, with expectations for persistently high interest rates continuing to act as a cap on its upside potential. The market is monitoring developments such as US-Iran negotiations, the reopening of key shipping routes, and the upcoming nonfarm payrolls data for directional cues.

The subsequent recovery in market sentiment is seen as contingent on two potential scenarios. The first scenario involves a reopening of key shipping lanes, a sustained decline in oil prices, or the emergence of negative feedback from high interest rates, which could lead to a marginal easing of the Fed's hawkish stance and provide upward momentum for precious metals.

The second scenario posits that even if inflation proves sticky, the Federal Reserve refrains from pivoting to actual interest rate hikes. This could still lead to a decline in real interest rates, which would be a positive development for gold. The long-term outlook for gold remains optimistic.