The US Dollar Index Hits a New Short-term High, Gold Continues to Face Pressure and Pulls Back

On June 24, driven by rising safe-haven sentiment, the US Dollar Index continued to climb, at one point surpassing 101.45 during trading hours and reaching a new high in over a year. Gold continued to face downward pressure and retreated, with COMEX gold futures trading near $4,100. Major Wall Street investment banks collectively lowered their gold price forecasts: Goldman Sachs reduced its year-end target price to $4,900, while Deutsche Bank's extreme scenario sees it falling to $3,800.

It is worth noting that senior fund manager Jerry Prior believes the recent pullback in gold is an excellent buying opportunity. Hawkish statements from the Federal Reserve and a cooling in safe-haven sentiment triggered a decline in gold prices, but the market has largely priced in most of the negative factors. Once oil supply is restored, central banks around the world are expected to increase gold holdings. De-dollarization remains the core support for a long-term gold bull market. While short-term interest rates may bring volatility, this decline is merely a correction within the ongoing bull trend, with year-end gold prices potentially rising to $4,500 per ounce.

Shenwan Futures analysis points out that in light of the hawkish signals sent at the Federal Reserve's June meeting, the market’s expectations for a rate hike have strengthened, placing renewed pressure on precious metals. However, as oil prices have already fallen sharply and inflation risks are easing, coupled with the still uncertain recovery of the US job market, there is less necessity for interest rate hikes within the year, and the pressure from a high interest rate environment is gradually diminishing. From a medium- to long-term perspective, precious metals prices have a solid foundation to continue rising: the central level of global geopolitical risks is elevated, the restructuring of the political and economic order is ongoing, and fiscal pressures in the US are intensifying. The de-dollarization process will keep advancing, with the trend of global central banks increasing gold reserves continuing.

Editor: Zhu Henan