Gold prices have been in a sustained correction since March, with the international gold price at one point falling below $4,000 per ounce, down more than 25% from an early-March high of $5,321 per ounce, according to a China International Capital Corp. (CICC) research note.
According to Jin10, CICC attributed the pullback mainly to two factors: rising oil prices and inflation concerns linked to the U.S.-Iran conflict, and a more hawkish interpretation of Fed Governor Kevin Warsh’s debut at the June FOMC meeting.
CICC said the market has worried that U.S. inflation remains resilient, reinforcing expectations of tighter monetary policy. It also said Warsh emphasized inflation discipline and that the dot plot raised inflation expectations. CICC added that, among 18 voting members, half supported at least one rate hike within the year.
CICC said the prevailing market narrative has been that the Federal Reserve’s policy focus is controlling inflation. It said futures markets have priced in one rate hike in 2026 and one in 2027, which it described as supporting the dollar and weighing on gold.
However, CICC argued these two drivers should not be extrapolated linearly. It said U.S. inflation may have already peaked and could enter a downward trend in the second half of the year. CICC also said Warsh’s debut did not necessarily mean the Fed has fully shifted toward tightening, and that current messaging may be intended to preserve room for a future return to easing.
CICC concluded that the current gold pullback does not signal the end of the bull market and said a turning point may not be far away. It said it remains optimistic on gold’s outlook and recommended maintaining positions and adding on dips.
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