The CSOP Gold 2x Daily Leveraged ETF (SEHK: 07299) experienced a significant decline of over 6%. At the time of writing, it was down 6.21%, trading at HK$24.16 with a turnover of HK$44.32 million.

The catalyst for this movement was the release of the US May non-farm payrolls report on June 5th. The data revealed a substantial addition of 172,000 jobs, far exceeding market expectations of 88,000. This strong performance, coupled with upward revisions totaling 93,000 for the March and April data, marks the strongest three-month job growth in over two years. The unemployment rate held steady at 4.3%.

This robust report has significantly bolstered market expectations for further interest rate hikes by the Federal Reserve. Consequently, the US dollar surged, with the Dollar Index (DXY) firmly holding above the 100 level. Concurrently, US Treasury yields across the curve saw a sharp increase, creating substantial downward pressure on the price of gold.

Analyst Insights on the Economic Outlook

A recent report from Goldman Sachs highlighted that US economic activity and labor market data have consistently outperformed expectations in recent months, with job growth showing a particularly notable resurgence. The analysis suggests that core PCE inflation is likely to remain stubbornly above 3% through 2026, driven by a combination of tariffs, elevated oil prices due to geopolitical tensions, and strong AI-related demand. This scenario leaves the Federal Reserve with little immediate urgency to cut interest rates.

In a notable shift, Goldman Sachs has doubled its probability of a Fed rate hike to 20%. This adjustment implies that markets will need to recalibrate their expectations for a policy easing path, presenting a significant challenge for funds positioned for near-term rate cuts.