The storm that hits international markets did not leave even the most traditional secure shelter of investors unscathed. THE gold recorded the largest weekly drop since March, recalling that even precious metals do not remain unaffected when expectations of interest rates and the American economy change.
Future fulfillment contracts decline Monday over 1% to $4,320 per ounce, after Friday's 3% dip, which was the largest daily drop since the end of March. Weekly losses reached 4.9%, at the worst performance in the last nearly three months.
Correction is even more important as it comes at a time when investors had turned massively to gold due to the Middle East war, geopolitical risks and concerns about the global economy.
What triggered the sell off
The main cause of the fall is in the United States. The data on the May labour market proved stronger than estimates, strengthening the image of an economy that continues to stand despite high interest rates.
For the markets the message was clear: the Federal Reserve has no reason to go down interest rates. On the contrary, it should rather seriously consider the possibility of an increase.
This is a negative development for gold. Unlike bonds or bank deposits, precious metal offers no return. When interest rates remain high, the opportunity cost of holding gold increases and many investors choose to transfer funds to positions with higher returns.
The performance of the American two-year bond now moves close to 4.2%, at the highest level since early 2025, while the dollar index has returned above the psychological limit of 100 units.
Both elements traditionally function as a counterweight to gold prices.
A critical technical support lost
In addition to fundamental data, analysts also monitor the technical market image. Friday's fall led gold under the 200-day mobile average, which was at $4,443 per ounce.
This is one of the most important technical levels used by investment funds and portfolio managers to assess the long-term trend of a market.
The break-up of this limit triggered a new sales wave and strengthened concerns that the correction may have continued.
Ed Yardeni, founder of Yardeni Research and one of Wall Street's most known strategic analysts, estimates that the next major support area is at $4,000 per ounce. Several still see the precious metal slipping to the level of $4,000.
This practically means that an additional retreat of about 7% from current levels cannot be excluded.
Why the «bulls» do not abandon gold
Despite short-term weakness, the most optimistic analysts remain firm in their predictions.
Yardeni still considers that the long-term upward trend remains intact and predicts that, once the war with Iran is deescalating and markets are stabilised, gold will return to an upturn.
His prediction places the price at $5,500 by the end of 2026 and at $10,000 by the end of the decade. The argument is based on ongoing demand from central banks, global debt growth and long-term inflationary pressures that still concern investors.
Under pressure and silver
Weakness is not limited to gold.
Silver records even greater losses, retreating more than 2% on Monday, after Friday's 6.5% collapse, which was its worst daily performance for almost a month.
According to Saxo Bank, the correction is also due to the excessive concentration of upside positions created in previous months. As investors gave up negative positions and accumulated new rising bets, the market became particularly vulnerable to a sharp reversal.
The big question
The next move of gold will depend largely on two factors: Fed's decisions and the evolution of the geopolitical crisis in the Middle East.
If the American economy continues to show resilience and bond yields remain high, pressure on precious metal may continue.
Instead, a new deterioration in the geopolitical climate or indications that the Fed is approaching interest rate cuts could revive demand for safe shelters.
At present, the market seems to abandon the logic of panic and return to the logic of interest rates. And this is an environment in which gold traditionally finds it difficult to shine.
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