Walsh Sends Dovish Signal, Rate Hike Expectations Significantly Cool, Precious Metals Sector Sees Recovery Rally

　　On Wednesday local time, Federal Reserve Chair Jerome Powell attended the European Central Bank's annual Central Banking Forum in Sintra, Portugal, and made a key statement, saying that U.S. inflation expectations and upside inflation risks have both receded over the past four weeks. Coupled with previously released U.S. employment data falling short of expectations, these multiple signals have collectively weakened market expectations for a rate hike by the Federal Reserve within this year.

　　Following this dovish tone, U.S. Treasury yields and the U.S. Dollar Index both weakened, while non-yielding assets like gold saw significant boosts. Overnight, spot gold surged to the $4,100 mark, and in early Asian trading on July 2, gold prices remained stable above $4,050, with a daily increase of nearly 1%.

　　Industry analysts pointed out that the market had already fully priced in expectations of Federal Reserve rate hikes. Now, with cooling inflation and weak employment as two key factors, the necessity for another rate hike this year has dropped significantly, and the pressure from high interest rates on precious metals will gradually ease. In the medium to long term, global geopolitical risks, continued bullion purchases by central banks, and the trend of de-dollarization will continue to provide solid support for gold prices. The price midpoint for gold has a strong foundation for further upward movement, as capital flows are increasingly allocated toward the precious metals sector.

　　A previous report by Goldman Sachs stated, “The gold bull market is not over.” The institution added, “We see further upside for gold prices, influenced by both structural and cyclical factors. Structurally, the diversification of reserves by emerging market central banks remains the core reason we forecast gold prices to rise to $4,900 per ounce by the end of 2026.”

Editor: Zhu Henan