Gold prices extended their decline on June 8 to $4,268 per ounce — the lowest since March 23 — as Middle East tensions escalated with Iran and Israel trading military strikes, according to Business-Today. The sharp drop was amplified by a surge in crude oil prices, which raised inflation concerns and strengthened the case for rate hikes. However, the yellow metal recovered as Iran and Israel eventually ended their attacks, with spot gold trading at $4,345 intra-day, up 0.39%.
Geopolitics and Oil
Business-Today reported that Israel and Iran engaged in a skirmish on Sunday, with Israel intercepting Iran’s airstrikes while striking targets in Tehran and Mahshahr on Monday. Iran, acting on behalf of its proxy Hezbollah, warned it would target all oil and gas facilities linked to Israel, the US, and their allies if its own energy infrastructure came under attack. Yemen's Houthis, another Iranian proxy, also fired missiles on Israel. Crude oil prices, which had slumped over 2% on Friday, surged over 5% on Monday before trimming gains to 1.5% as the strikes ended.
Data Roundup: Jobs and Inflation
Business-Today noted that the US non-farm payroll report for May was robust, with employers adding 172,000 jobs — nearly double the estimate of 88,000. The two-month payroll revision was 93,000. Average hourly earnings came in at 0.3% month-on-month (forecast 0.3%, prior 0.2%), with year-on-year earnings growth of 3.4% (prior 3.6%). The labour force participation rate and unemployment rate were steady at 61.8% and 4.3%, respectively. This was the third consecutive encouraging job report, increasing the probability of a rate hike. On a positive note, NY one-year inflation expectations data released on Monday eased from 3.64% to 3.46% (estimate 3.72%), which helped gold recover.
US Dollar and Yields
Business-Today reported that the US Dollar Index at the time of writing was 99.95, down 0.10%, after surging to a nine-week high of 100.06 in the week ending June 5. Two-year US yields, which shot up 4% to 4.15% last week, were steady, while ten-year yields rose 1 basis point after gaining 2.5% to 4.53% last week.
Gold ETF Holdings and CFTC Positioning
Total known global gold ETF holdings stood at 98.20 million ounces — the lowest since February 4 and down 0.75 million ounces year-to-date. Business-Today noted that holdings have fallen 2.72 million ounces since the Iran war began on February 28. According to CFTC data for the week ending June 2, money managers increased their bullish gold bets by 14,410 net-long positions to 111,341 — the most bullish in 18 weeks. Long-only positions rose 4,726 lots to 129,260 (highest in 11 weeks), while short-only positions fell from 9,684 lots to 17,919 lots (lowest in about 16 months).
Central Bank Demand: China Buys for 19th Straight Month
Business-Today reported that the People's Bank of China (PBoC) extended its gold-buying streak to the 19th straight month in May, purchasing 320,000 troy ounces. This is the longest buying streak since at least 2015, when the PBoC began publishing more regular updates on its gold reserves.
Outlook
Business-Today quoted Praveen Singh, Head Currencies and Commodities at Mirae Asset ShareKhan, saying gold prices continue to be under pressure as crude oil prices remain high with upside risk. The combination of elevated oil, a strong US jobs market, and heightened rate hike expectations weighs on the metal, though geopolitical uncertainty and central bank buying provide a floor. Traders will watch for upcoming data releases and any further escalation in Middle East tensions.
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