During Thursday's Asian trading session, spot gold extended its prior losses, with the price dipping to around $4,050 per ounce, marking its lowest level since November 2025. Market attention remains fixed on the stronger-than-expected US inflation data and the potential shift in the Federal Reserve's policy path. The robust inflation figures have prompted investors to recalibrate their interest rate expectations, placing significant selling pressure on the gold market.

The latest figures from the US Bureau of Labor Statistics revealed that the Consumer Price Index (CPI) for May rose by 4.2% year-over-year, up from 3.8% in April, reaching its highest point in nearly three years and aligning with market forecasts. On a monthly basis, the CPI increased by 0.5%, also meeting market expectations. The core CPI, which excludes food and energy prices, rose 0.2% month-over-month and 2.9% year-over-year, indicating that underlying US inflation retains some resilience.

The persistent inflationary pressures have led markets to scale back expectations for near-term Fed rate cuts. While a consensus expects the Fed to hold interest rates steady at its June meeting, movements in interest rate futures show investors are beginning to bet the central bank may resume rate hikes later this year to address ongoing inflation risks. As gold yields no interest, the opportunity cost of holding it increases in an environment of sustained or rising interest rates, causing funds to flow toward higher-yielding dollar-denominated assets and bond markets.

Concurrently, geopolitical tensions in the Middle East remain elevated. US Central Command stated that the United States conducted military strikes against Iranian-linked targets on Wednesday, describing the action as a response to Iran's continued hostile activities. Previously, US President Trump had publicly stated that the US would take stronger measures against Iran if a relevant agreement could not be reached. Although geopolitical risks typically boost demand for gold as a safe-haven asset, the current market is more focused on rising inflation and the Fed's hawkish policy outlook, preventing these risk-off factors from effectively halting gold's decline.

Technical Analysis Perspective

On the daily chart, the gold price has broken below a key previous support zone. The overall trend is shifting from high-level consolidation to bearish dominance, with the price trading below the primary short- and medium-term moving averages, indicating persistent selling pressure. The initial significant support level to watch is the psychological $4,000 mark. A break below this level could see gold test the $3,950 to $3,900 range. Initial resistance lies near $4,150, with stronger resistance around the $4,200 area. Regarding technical indicators, the RSI has entered oversold territory, and the MACD has formed a bearish crossover and continues to diverge downward, suggesting the medium-term downward momentum has not yet fully dissipated.

Short-Term Market Structure

Observing the 4-hour chart, gold exhibits a clear descending channel pattern, with the moving average system maintaining a bearish排列. Although some technical indicators suggest a potential for a brief oversold bounce after the consecutive declines, the bearish trend is expected to persist as long as the price fails to reclaim and stabilize above the $4,200 level. In the near term, investors should monitor US economic data, speeches from Federal Reserve officials, and developments in the Middle East situation, as these factors could serve as important catalysts for gold price volatility.

Market Outlook and Key Drivers

The gold market is currently in a phase dominated by inflation pressures and monetary policy expectations. The resurgence in US inflation has reinforced market judgments that the Fed will maintain high interest rates for an extended period or even tighten policy further, providing support for the US dollar and Treasury yields while significantly pressuring the non-yielding gold asset. Although Middle East tensions may periodically spur safe-haven buying, gold's short-term trajectory remains biased to the downside until there is a clear shift away from the high-interest-rate environment. Going forward, investors need to closely watch subsequent US inflation trends, policy signals from the Federal Reserve, and the development of global risk events to determine whether gold prices can stabilize at key support levels and embark on a new directional move.