Gold stocks are experiencing a broad sell-off across the board. At the time of writing, Lingbao Gold (03330) shares fell 5.96% to HK$14.05. Zijin Gold Intl (02259) shares declined 5.71% to HK$110.6. Chifeng Gold (06693) shares dropped 5.26% to HK$27.38. SD GOLD (01787) shares were down 2.76% to HK$21.84.

This movement is linked to a significant drop in spot gold prices earlier today, with the precious metal briefly falling below the $4,300 per ounce level.

Market Drivers Behind the Sell-off

The catalyst for the pressure on gold stems from recent US economic data. The US Bureau of Labor Statistics reported that non-farm payrolls increased by 172,000 in May, nearly double the market expectation of 88,000 and significantly higher than April's figure of 115,000.

This unexpectedly strong jobs report has reignited expectations for potential interest rate hikes by the Federal Reserve. Following the data release, the yield on the 10-year US Treasury note surged to 4.55% last Friday, marking a two-week high.

Broader Economic and Geopolitical Context

Adding to the complex backdrop, geopolitical tensions have resurfaced with reports of Iran launching an attack on Israel, the first such incident since a ceasefire between the US and Iran approximately two months ago.

In response to the resilient labor market, economists at Goldman Sachs have revised their outlook, now forecasting no interest rate cuts from the Fed this year. The bank has pushed back its projections for the final two rate cuts from December 2026 and March 2027 to June and December 2027, respectively.

Analysts at Huatai Securities have expressed concerns that a prolonged closure of key straits could exacerbate global energy shortages. They suggest this could worsen cash flow pressures for both Gulf nations and developing net-importing countries, creating an unfavorable short-term environment for gold supply and demand.

Furthermore, the analysts note that short-term global nominal interest rates may continue to rise, potentially pushing real interest rates higher and placing additional downward pressure on gold prices.