Where will the international gold price go under heavy pressure?

Recently, the fluctuation of international gold prices has attracted the attention of global investors. After experiencing a long-term upward trend, the gold price suddenly came under heavy pressure and experienced a significant correction, triggering widespread discussions in the market about its future direction. To deeply analyze this phenomenon, it is necessary to start from multiple key factors.

Geopolitics has always been one of the key factors affecting international gold prices. In the past few years, the international situation has continued to be tense. From the Russia-Ukraine conflict to the military confrontation in the Middle East, the global geopolitical uncertainty has been exacerbated. Investors flooded into the gold market in large numbers due to their need for safe haven, driving the price of gold to continue rising. For example, at the beginning of the Russia-Ukraine conflict, the international gold price rose rapidly in a short time, from about $2000 per ounce to more than $2500.

However, there have been signs of easing in the geopolitical situation recently. With the advancement of the Russia Ukraine peace talks and the achievement of ceasefire agreements in some parts of the Middle East, market risk aversion has significantly cooled down. Investors' preference for risk assets has rebounded, and funds are gradually flowing out of safe haven assets such as gold, leading to downward pressure on gold prices. Since May, the London spot gold price has fallen more than 10% from its high, and COMEX gold futures prices have also fallen sharply, which is a clear reflection of the market's retreat from risk aversion.

However, the geopolitical situation remains complex and volatile, and potential conflict risks still exist. Once the geopolitical situation becomes tense again, gold, as a traditional safe haven asset, will still attract a large amount of capital inflows, driving prices back up. In the long run, geopolitical uncertainty has always been an important factor supporting the price of gold.

Economic data and monetary policy have a crucial impact on international gold prices. As the world's largest economy, the United States is highly concerned about changes in its economic data and monetary policy. Recently, the economic data released by the United States has been mixed, with first quarter GDP data showing a slowing trend in economic growth, but non farm employment data showing some resilience. The complexity of this economic data poses a dilemma for the Federal Reserve in its monetary policy decisions.

From a global perspective, the monetary policies of other countries also have an impact on the price of gold. Some countries have adopted loose monetary policies in response to downward economic pressure, which further promotes the expectation of a loose global monetary environment and provides potential upward momentum for gold prices. Recently, the European Central Bank has hinted at maintaining a loose monetary policy, and the Bank of Japan has also stated that it will continue to implement an ultra loose monetary policy. These measures have indirectly affected international gold prices.

The supply and demand relationship of gold is also a fundamental factor determining its price trend. On the supply side, global gold mining production has grown slowly, with an increase of less than 1% in recent years due to the gradual depletion of resources and rising mining costs. At the same time, although the amount of gold recovered has increased, it is difficult to make up for the shortage of mineral supply. From the demand side, gold demand mainly comes from consumption of gold jewelry, investment in gold bars and coins, and central bank purchases of gold.

The views of investment institutions and market sentiment have a significant impact on the short-term trend of international gold prices. Recently, with the correction of gold prices, some investment institutions have shown divergent attitudes towards gold. Some institutions believe that the pullback in gold prices is a short-term phenomenon. In the long run, against the backdrop of increasing global economic uncertainty, loose monetary environment, and lingering geopolitical risks, gold still has investment value and maintains optimistic expectations for gold. UBS maintains its forecast for gold prices at $3500 per ounce by the end of this year and next year, with a peak of $3600 expected by mid-2026.

However, some institutions hold a cautious attitude and believe that gold prices still face downward pressure in the short term. Some hedge funds have significantly reduced their long positions in gold during the gold price correction, exacerbating the selling pressure in the market. The fluctuation of market sentiment also makes investors more cautious in their investment decisions towards gold, further exacerbating the volatility of gold prices.

Under the current heavy pressure, the future trend of international gold prices is full of uncertainty. In the short term, due to the easing of geopolitical tensions, uncertainty in economic data, and fluctuations in market sentiment, gold prices may maintain a volatile downward trend, and further exploration is not ruled out. If the market's risk aversion sentiment further subsides and the US dollar strengthens due to improved economic data, gold prices may fall below key support levels, testing the important threshold of $3000 per ounce.