Over the weekend, tensions between the US and Iran flared up once more, leading to a decline of over 1% in spot gold during Monday's early trading session. Looking back at last week, gold experienced a decline followed by a rebound. The London spot gold price fell below the key support level of $4000 per ounce during the week before recovering, ending the week down over 1% and marking its fourth consecutive weekly loss. Domestically, Shanghai gold futures saw a larger drop than the international market, with the main contract falling over 5% for the week.

Key Drivers for the Second Half of the Year

Looking ahead to the second half of the year, the core pricing logic for precious metals will continue to be dominated by the path of the US Federal Reserve's monetary policy. The US-Iran situation remains an important variable and a key geopolitical observation point. Under a baseline scenario, if the 60-day US-Iran negotiations proceed smoothly and the Strait of Hormuz remains permanently open, a downward shift in the central price of crude oil would alleviate inflationary pressures. This could lead to a recovery in expectations for Federal Reserve interest rate cuts. The anticipation of lower real interest rates would open up medium to long-term upside potential for gold and silver prices. In particular, if a Fed "rate cut" could be implemented earlier, the probability of a bottom forming in the gold market would become more certain. The uncertainty lies in the potential for the Fed to maintain its independence and a strong dollar policy, persisting with a hawkish policy stance. This could trigger significant volatility in global financial markets and, from the perspective of tightening US dollar liquidity, continue to be unfavorable for gold price movements. Finally, from a price perspective, the London spot gold price has experienced an intra-year amplitude of 30% so far. Looking at historical trends, years with high amplitude, apart from last year, generally range between 30% and 35%. This suggests that the current downward trend may also be nearing its end. Looking back at the first half of the year from the perspective of June, gold has weathered numerous headwinds including a "bubble squeeze," geopolitical fluctuations, shifting rate hike expectations, and hawkish Fed rhetoric. With the market having priced in these negatives, sentiment may improve in the second half. However, it is important to note that a sustained trend opportunity likely requires a clear policy shift signal from the Federal Reserve, which may depend on more economic and inflation signals and require a longer observation period.