Investors in gold are reeling from a dramatic market sell-off, with international prices experiencing a historic single-day drop and domestic prices following suit, sparking questions about a potential market bottom later this year.

On June 11th, London gold prices staged an epic collapse, with an intraday swing exceeding $80 per ounce. As of 14:19, spot gold in London was quoted at $4,085 per ounce, having earlier touched a low of $4,035.41 per ounce, marking an 11-week low. The previous day, spot London gold saw a single-day plunge of $188, a steep decline of 4.44%, representing the largest daily drop of the year and erasing all year-to-date gains, turning them into losses. Concurrently, the main Shanghai gold futures contract fell below 900 yuan per gram, hitting a low of 885 yuan per gram, a cumulative decline of over 25% from its yearly high.

Investor Sentiment and Market Drivers

A gold investor expressed the current dilemma, stating that after purchasing accumulation gold at 1,100 yuan per gram, expecting a repeat of last year's rising trend, the market has moved in the opposite direction. With prices falling sharply and the latest international drop, seeing her holdings fall to 905 yuan per gram, she faces the difficult choice of cutting losses or holding on amid further decline fears, making her hesitant to attempt to buy the dip.

Inflation Data Creates a Mixed Picture

Data from the US Labor Department showed the Consumer Price Index (CPI) rose 4.2% year-on-year in May, up from 3.8% in April, reaching its highest level since May 2023, driven by continued increases in energy costs. Analysis suggests overall inflation resilience remains, but core inflation cooled more than expected. The data did not show a broadly overheated trend, presenting a dual structure of "energy-driven, core-weakening" inflation.

Simultaneously, analysis indicates that while the 4.2% CPI rise matched expectations, it marks the third consecutive month of strong growth, increasing household cost pressures. The inflation rate has now exceeded wage growth for two months, further eroding real purchasing power.

From a core CPI perspective, the monthly increase of just 0.2% in May was below the expected 0.3%, suggesting the overall CPI rise is primarily driven by the external shock of energy prices, not overheated intrinsic demand. Furthermore, the likelihood of a significant escalation in geopolitical tensions has decreased, with oil prices maintaining a volatile downtrend, indicating the peak of the direct war-related price shock has passed.

However, the inflation data is seen as having a structurally divergent impact on commodities. Energy-related varieties benefit from high energy CPI, with oil's inflation pricing logic strengthening, giving it anti-decline properties. Industrial metals like copper and aluminum are pressured by high interest rates and weak terminal manufacturing demand. Precious metals gold and silver present a short-term bullish but medium-term neutral-to-bearish outlook.

In the short term, cooling core CPI weakens expectations for aggressive Fed rate hikes, leading to a slight decline in US real yields and a weaker US dollar, creating a window for a corrective rebound in gold and silver after breaking key levels. From a medium-term perspective, the CPI exceeding 4% year-on-year indicates inflation is far from the 2% policy target. The core logic of high rates being maintained for longer remains unchanged, making any rebound merely a technical correction unlikely to reverse the medium-term trend of seeking lower levels. Silver, with its dual financial and industrial attributes, shows significantly higher volatility elasticity than gold, potentially rebounding more but also possessing stronger downside momentum, with weak photovoltaic and electronics industrial demand potentially amplifying silver's declines.

Can Central Bank Purchases Halt the Slide?

The question arises whether ongoing central bank gold purchases can stop the price decline. Analysis indicates that while sustained buying by global central banks in recent years is a key structural bullish factor, it cannot immediately reverse a downtrend driven by shifting rate expectations and liquidity-driven selling pressure. In short-term pricing games, central banks do not currently dominate price direction, acting more as price takers. However, in the medium-to-long-term allocation logic, central bank purchases provide a foundational support for gold prices different from traditional cycles.

Further analysis agrees that central bank buying can only provide a floor, not reverse the current downtrend. In Q1 2026, global central banks were net buyers of 244 tonnes, with the strategy of "buying the dip" becoming a normalized strategic allocation. However, central bank purchases are long-term reserve actions, not short-term price speculation. They can lock in a floor for deep declines but cannot prevent periodic downturns.

The core contradiction lies in short-term precious metal pricing being dominated by US real yields, the US dollar, and speculative capital. The volume of central bank purchases can only hedge against long-term selling pressure, struggling to offset the short-term pressure from continuous ETF outflows and large-scale speculative long position unwinding on COMEX. Only when prices fall to the lower range where central banks concentrate their buying will this behavior form strong support, slowing the decline rate rather than directly reversing the downtrend.

Geopolitics and the Fed's New Leadership

Notably, the traditional pattern where Middle East geopolitical tensions push gold prices higher has not held this year. Analysis suggests a new core logic of "reverse interest rate transmission" is at play. The traditional "geopolitical避险利好黄金" (safe-haven demand boosts gold) logic has failed. The new transmission chain is: Middle East conflict → rising oil prices → higher overall CPI → markets bet on the Fed maintaining high rates or even restarting hikes → pushing US Treasury yields higher → funds sell gold/silver and turn to US dollar safe-haven assets.

The current Middle East standoff continues to push energy inflation higher, thereby reinforcing the Fed's tightening stance, making the US dollar and US Treasuries the preferred短期避险资产. Combined with earlier geopolitical risks being priced in, conflict escalation triggers profit-taking from "buy the rumor, sell the fact" positions. Multiple factors together create the反常行情 of rising geopolitical tensions coinciding with falling gold prices. The traditional避险 logic would only stage a temporary return if the conflict spreads to global oil transport arteries, triggering widespread market liquidity panic.

Following the May CPI data release, CME interest rate futures show a probability exceeding 98% for the Fed holding rates steady at the June 17th meeting. The implied probability of at least one rate hike within the year has risen to around 50%, with December being the most likely window. Wall Street investment banks show clear divergence in views, with some raising the probability of a year-end hike, others seeing a high certainty for a September hike, and some judging no need for hikes this year given持续回落 in core inflation. Overall, market pricing has fully digested the expectation of "high rates maintained for longer," leaving the medium-term pressure on gold and silver unchanged.

Synthesizing current fundamentals, the probability of a Fed rate hike within the year has risen from almost zero to significantly present, but the probability of an immediate hike at the June meeting is extremely low. The unexpected slowdown in monthly core CPI, retreating gasoline prices, and the need to observe AI-driven inflation pressures give the Fed room to continue waiting.

The June meeting is likely to feature unchanged rates with a tight-leaning stance—a "hawkish hold." Based on prior statements, the new Fed Chair's style leans towards proactive "leaning against the wind," advocating that the Fed should not be swayed by short-term data noise but make autonomous decisions based on longer-term economic narratives. The market's key concern is how the new Chair views the persistence of inflation above target and how monetary policy will be implemented subsequently.

Further analysis adds that the new Fed Chair's first FOMC meeting on June 17th is expected to leave the benchmark rate unchanged but shift policy guidance comprehensively towards tightening. It is anticipated to release three key signals: first, removing dovish phrases like "moderate rate cuts within the year" from the policy statement, replacing them with neutral-to-tight language on rising inflation risks and保留进一步加息空间.

Second, the dot plot is expected to shift rate expectations significantly higher, removing expectations for cuts this year, with nearly half the members标注 the need for a 25-basis-point hike by year-end. Finally, the press conference is likely to verbally reinforce anti-inflation credibility,明确 ruling out premature policy easing and dampening market rate-cut fantasies. The core risk of this meeting lies in a hawkish shift in the dot plot.一旦上调利率中枢, US yields and the dollar would strengthen again, quickly ending any gold/silver rebound and开启新一轮探底.

Market Outlook and Investment Strategy

As gold prices持续下跌, institutional funds keep flowing out of the黄金市场. The timing of their return depends on three variables aligning precisely: whether the Fed Chair's press conference releases dovish signals, the actual transit status of the Strait of Hormuz, and whether subsequent US macroeconomic data (non-farm payrolls, CPI) shows signs of marginal weakening. The earlier these three resonate, the faster funds will return. If they remain in a tug-of-war, gold will likely oscillate反复震荡 between $4,300-$4,600 per ounce, with funds exhibiting high-frequency switching characteristics.

Regarding subsequent price trends, from a technical perspective, gold has broken below the annual moving average and all medium-term averages, with the RSI indicator in oversold territory for an extended period. Silver's decline is more pronounced, with a solid weekly downtrend, and weak industrial demand further amplifies its downside. In terms of downside space, core strong support for gold futures lies in the $4,000-$4,100 per ounce range, which is where central banks have集中增持. The remaining overall downside is only 5%-7%. Support for silver futures is in the $60-$62 per ounce range, with a maximum downside of about 10%. Central banks'常态化购金 has fortified the market bottom, eliminating the risk of a crash-like decline in precious metals.

As for when a bottom might form, short-term, after the June meeting concludes and market negatives are fully digested, gold may establish a阶段性小底. The medium-to-long-term bottom is likely to appear in the third quarter. By then, US economic data may show recession signals, Fed hike expectations could gradually cool, institutional funds may回流 to the precious metals sector, and叠加 central bank buying support, gold and silver有望结束下跌走势 and begin a new medium-term修复行情.

In summary, following the May CPI data release, the precious metals market has探明短线调整低点, and prices有望依托该位置开启反弹. However, this rebound does not break the core macro framework of the Fed maintaining high rates for longer. After the rebound ends, the new Fed Chair's first meeting on June 17th will become the core risk node.一旦点阵图释放鹰派信号, it will pressure gold and silver prices again. From a medium-term perspective, central bank buying effectively locks in the downside for gold prices, and this technical深度调整 is nearing its end. Investors are advised against盲目追空 and can wait for the fundamental拐点 in Q3 to emerge, then分批布局金银中长期配置.

For ordinary investors, the most rational strategy while short-term economic data and monetary policy direction remain unclear is to保持观望. Wait for clear signals of declining real利率 before分批建仓, and avoid盲目抄底 before a bottom is confirmed. Currently, bulls and bears are激烈博弈 around key support levels.一旦该支撑价位失守, it would severely打击多头市场情绪. Without new positive drivers, gold and silver will find it difficult to re-enter an上涨通道 in the short term.