During the European session on Monday, June 8, Beijing time, the U.S. dollar index traded slightly firmer around 100.128, spot gold extended its Asian-session decline, trading around $4,289.00/oz. After the European session opened, it fell to as low as $4,268.42, down more than $21 from the Asian open, with the day's loss widening to 0.89% and the price hitting a three-month low. The main driver of the decline was stronger-than-expected U.S. nonfarm payrolls data, which lifted rate-hike expectations. A stronger dollar and rising U.S. Treasury yields weighed on gold prices. The market is now waiting for Wednesday's U.S. CPI data for further guidance; if it also beats expectations, a test of the $4,120 support zone cannot be ruled out.
[Fundamental Analysis]
The direct trigger for this round of weakness in spot gold was the U.S. May nonfarm payroll report released last Friday. It showed 172,000 new nonfarm jobs, far above the market forecast of 85,000. April was also sharply revised up from 115,000 to 179,000, while the unemployment rate held at 4.3%, clearly showing the resilience of the U.S. labor market.
As a result, the market quickly repriced the Fed's policy path. The CME FedWatch tool showed the probability of a 25 bp rate hike at the December FOMC meeting jumping from 28% before the data to 67% afterward, fully erasing earlier hopes for a rate cut this year. The U.S. dollar index jumped above 100, and the 10-year Treasury yield rose to 4.55%, directly increasing the holding cost of non-yielding gold. The safe-haven premium from earlier geopolitical tensions was fully digested.
There are indeed obvious geopolitical risks at present: Yemen's Houthi movement announced a full blockade of 'hostile ships' in the Red Sea, and Iran has also suggested charging transit fees in the Strait of Hormuz. With two critical energy shipping chokepoints under pressure at the same time, any disruption to shipping would directly push up global energy prices and intensify inflationary pressure.
But instead of supporting gold, this geopolitical risk has reinforced the need for Fed hikes because higher oil prices would further strengthen the case for tightening, ultimately turning into a negative for gold. That is the core reason the safe-haven attribute did not show up this time.
Although gold is under obvious short-term pressure, the long-term logic supporting it has not been broken. The structural trend of continued central-bank buying has not changed. In Q1 this year, global central banks bought a net 244 tons of gold, up 3% year on year. The People's Bank of China has now increased its holdings for 19 straight months, and rigid official-reserve demand provides clear bottom support for prices.
Gold has now given back all year-to-date gains and returned to end-2025 levels. The $4,300 mark has become the key battleground: if it breaks below that level, bears will open more downside; if support holds, a recovery rebound remains possible thanks to buying demand. The next market focus will shift to this week's U.S. CPI release and the Fed's pre-FOMC remarks.
[Gold Price Analysis]
From a technical perspective, the current gold downtrend is clear: the weekly chart printed a large bearish candle with a full body, breaking directly below the 4,400-4,800 consolidation range for the first half of the year. The weekly MACD has formed a death cross and the green histogram is still expanding, confirming the bearish trend. On the daily chart, gold has already fallen below the 200-day moving average, the first break below this key line since October 2023. Trend-following funds will likely add shorts, with initial support seen in the $4,200-$4,250 zone, the lower edge of this year's March consolidation range, where some buying support exists.
In the short term, gold has temporarily stabilized around $4,300 during the European session and may see a small technical rebound, but the rebound is likely limited. Resistance is concentrated in the $4,370-$4,400 zone. If price cannot break above that range, the downtrend is likely to continue. Market attention will next center on Wednesday's May U.S. CPI data and next Wednesday's FOMC meeting. If CPI also beats expectations, gold is likely to break below $4,200 and open further downside.
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