Bearish Outlook on Gold for June Despite Escalating Geopolitical Tensions

Eva Chen

Commodity

Political

Summary:

Safe-haven assets retreat, unresponsive to geopolitical tensions.

SELL XAUUSD

Close Time

CLOSED

3380.39

Entry Price

3231.00

3425.00

4215.82 +17.91 +0.43%

560.0

Pips

Profit

3231.00

3324.39

Exit Price

3380.39

Entry Price

3425.00

Fundamentals

Amidst the market's close watch on the evolving situation in the Middle East, gold gapped up at the open on Monday, reaching a peak of 3398 USD.

The US's intervention in the Iran-Israel conflict over the weekend has intensified concerns over potential retaliatory actions from Iran. Of particular concern is the possible disruption of the primary oil supply routes in the Middle East.

According to Iranian official media, the Iranian parliament supported a proposal to close the Strait on Sunday. However, the ultimate decision-making power lies with the Supreme National Security Council and Iran's Supreme Leader.

Iran, being one of the world's largest oil producers and exporters, controls the Strait of Hormuz, a crucial maritime energy corridor through which 20% to 30% of the world's oil is transported. Should Iran choose to close the Strait, the global market would likely struggle to cope with the consequences.

Since the US attack on Iranian nuclear facilities over the weekend, gold has, against the norm, failed to rally on the back of safe-haven demand. The market's response to the attack has been lukewarm, seemingly awaiting Iran's next move.

As investors await Iran's response to the US airstrike, the risk of further escalation of geopolitical tensions in the Middle East continues to weigh on investor sentiment. The uncertainty also provides support to the safe-haven gold price and helps to limit its downside potential. Given our consistent bearish stance on gold prices for June, it is prudent to wait for a strong follow-up sell-off before preparing for a continued decline in gold prices from their near two-month highs.

This week, market participants will also be keeping a close eye on speeches from Federal Reserve officials, including Chairman Powell, who will testify at a two-day congressional hearing. The discussions are expected to cover the economic impacts of Trump's trade tariffs and the US military strikes on Iran.

Key macroeconomic data to watch include the core inflation rate (excluding food and energy), initial jobless claims, and the PMI Business Activity Index. These reports could influence the Fed's next policy moves and also offer more trading opportunities for investors.

Bearish Outlook on Gold for June Despite Escalating Geopolitical Tensions_1

Technical Analysis

From a technical standpoint, gold's gap up at the open during the Sydney session on Monday did not lead to an effective upward structure. Given that the oscillators on the daily chart are losing positive momentum, gold prices may be showing signs of a short-term peak.

Based on the fact that gold prices typically exhibit negative momentum in June, we continue to adhere to a strategy of selling on rallies.

Trading Recommendations

Trading Direction: Sell

Entry Price: 3387

Target Price: 3231

Stop Loss: 3425

Valid Until: July 8, 2025, 23:55:00

Support: 3360/3346/3338

Resistance: 3388/3400/3403

Risk Warnings and Disclaimers

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Alan

Commodity

Summary:

The ongoing escalation of the Middle East geopolitical crisis, marked by U.S. airstrikes on Iran and the Iranian parliament's vote to close the Strait of Hormuz, is expected to sustain upward pressure on crude oil prices.

BUY WTI

Close Time

CLOSED

73.966

Entry Price

77.900

71.900

59.972 +0.163 +0.27%

206.6

Pips

Loss

71.900

71.895

Exit Price

73.966

Entry Price

77.900

Fundamentals

The core geopolitical tension in current WTI crude oil pricing centers on the escalation of risks in the Strait of Hormuz. The sudden deterioration of Middle Eastern stability has triggered a panic-driven repricing of oil supply risks: last weekend's U.S. military strikes on Iranian nuclear facilities and the Iranian parliament's vote on closing the Strait of Hormuz have collectively threatened approximately one-third of global maritime crude oil trade with potential disruption. This geopolitical risk premium caused WTI futures to open sharply higher today, but subsequent market reassessment, viewing the likelihood of Iran closing the strait as low, led to a retreat, with WTI erasing its early gains and maintaining a downward trend through the European trading session.

In response to U.S. airstrikes targeting Iran's nuclear infrastructure, Iran's Supreme Leader Ayatollah Khamenei's senior advisor, Ali Shamhani, posted on social media that even if Iran's nuclear facilities are destroyed, the conflict is far from over; uranium enrichment capabilities, technical expertise, and political resolve remain intact.

Meanwhile, Khosravi, a member of Iran's Parliamentary National Security Committee, stated that the parliament has concluded that closing the Strait of Hormuz should be considered, though the final decision rests with Iran's Supreme National Security Council. Market analysts warn that if Iran proceeds with closing the strait, crude oil prices could surge to US$120 per barrel.

Technical Analysis

Conflict Ignites the Oil Market's Core, with Bullish Trends Continuing Unabated_1

In the 4H timeframe, WTI crude oil opened sharply higher today, gaining nearly US$3 to reach US$76.66 before quickly retracing its gains, effectively erasing the entire intraday rally and maintaining a downward correction trend. However, the SMA system remains in a bullish alignment, indicating that the upward momentum for WTI crude oil has not yet reversed, suggesting a higher probability of continued short-term gains.

Currently, WTI crude oil has retreated to the Fibonacci retracement level of 0.236 at US$72.59, which also coincides with the MA20, creating a support resonance. This enhances the likelihood of WTI maintaining its bullish trend. If the price fails to effectively break below US$72.59 and the MA20 in the near term, the short-term outlook remains bullish; otherwise, WTI may test the key support level at US$71.13.

It is recommended to go long at the lows.

Trading Recommendations

Trading Direction: Buy

Entry Price: 73.70

Target Price: 77.90

Stop Loss: 71.90

Valid Until: July 7, 2025 23:00:00

Support: 72.78, 72.06

Resistance: 76.66, 79.35

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

This pattern could indicate that bullish momentum is waning, potentially opening the door for bears to regain control.

SELL USDCHF

Close Time

CLOSED

0.81636

Entry Price

0.80600

0.82150

0.80334 -0.00121 -0.15%

27.8

Pips

Profit

0.80600

0.81358

Exit Price

0.81636

Entry Price

0.82150

Rising concerns about possible U.S. involvement in the Middle East conflict have intensified demand for the Swiss franc (CHF), a well-known safe haven currency during times of geopolitical tension.

The ongoing conflict between Israel and Iran has now entered its seventh day. The White House recently stated that U.S. President Donald Trump will decide within the next two weeks whether to formally support Israel in the conflict. The uncertainty surrounding the potential escalation of war in the Middle East, combined with the risk of direct U.S. involvement, is amplifying risk-off sentiment and driving capital into safe-haven assets like the Swiss franc.

On Thursday, the Swiss National Bank (SNB) surprised the markets by cutting its policy rate by 25 basis points—from 0.25% to 0.00%—during its June meeting. Moreover, the central bank did not rule out a return to negative interest rates in the near future. The rate cut immediately strengthened the Swiss franc against the U.S. dollar.

Charlotte de Montpellier, economist at ING Bank, commented: “Unless there is a significant shift in conditions between now and September, today’s decision paves the way for another rate cut in September and a potential return to negative interest rates.”

However, the SNB also offered a relatively hawkish outlook, suggesting it does not currently plan further cuts in the short term. This stance disappointed some market participants who had anticipated a quicker move into negative territory.

Meanwhile, the U.S. Federal Reserve struck a notably more hawkish tone, offering support to the U.S. dollar. The Fed left interest rates unchanged on Wednesday and reaffirmed its forecast of two rate cuts in 2025. However, Fed Chair Jerome Powell downplayed those projections, citing rising inflationary pressures linked to newly imposed tariffs by the Trump administration. His comments cast doubt on a potential rate hike in September that many investors had priced in.

The Fed’s latest monetary policy report acknowledged that there are early signs tariffs may be contributing to upward pressure on inflation. Still, the full impact has yet to be fully reflected in economic data. The report also emphasized that current policy remains appropriate and that financial stability is holding up well despite heightened uncertainty.

This contrasts with the remarks made by Fed Governor Christopher Waller, who recently said the Fed could begin cutting rates as early as July, highlighting internal divisions within the central bank’s policy outlook.

In terms of U.S. data, the latest reports painted a mixed picture for the dollar. The Philadelphia Fed Manufacturing Index came in flat at -4.0 in June, matching May’s reading and falling short of expectations for modest improvement. The stagnation signals that regional manufacturing activity remains weak, weighed down by soft demand and the first signs of cooling in the labor market. Of particular concern, the employment subindex fell back into negative territory for the first time since May 2020, indicating renewed contraction in manufacturing jobs. Fresh Bearish Momentum May Build from Resistance Zone_1

Fresh Bearish Momentum May Build from Resistance Zone_1

Technical Analysis

USD/CHF is currently encountering strong resistance near its 100- and 200-period moving averages, located at 0.8159 and 0.8186, respectively, on the 4-hour chart. These zones have repeatedly acted as a ceiling, from which price has previously reversed to the downside. Should this pattern continue, a renewed decline toward the local low around 0.8051—last visited on June 12—remains a likely scenario.

Additionally, the Relative Strength Index (RSI) peaked at 70.45 on June 18, entering overbought territory. Since then, it has failed to form a new high, and bearish candles have emerged from the vicinity of the 200-period moving average. This pattern could indicate that bullish momentum is waning, potentially opening the door for bears to regain control.

A decisive close below the 100-period moving average may accelerate downside momentum, especially if geopolitical tensions continue to dominate market sentiment and boost demand for the Swiss franc. Conversely, a strong breakout above the local high at 0.8212 could signal a resumption of the bullish trend, challenging the current bearish narrative.

Trading Recommendations

Trading direction: Sell

Entry price: 0.8165

Target price: 0.8060

Stop loss: 0.8215

Validity: Jun 30, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Forex

Central Bank

Summary:

GBPJPY extended gains on Friday, propelled by sustained yen weakness stemming from uncertainty around the timing of the Bank of Japan's (BoJ) next rate hike. This occurred despite UK May retail sales unexpectedly plunging 2.7% month-on-month (MoM), far worse than the anticipated 0.5% decline.

BUY GBPJPY

Close Time

CLOSED

195.989

Entry Price

198.500

193.490

206.917 -0.183 -0.09%

161.5

Pips

Profit

193.490

197.604

Exit Price

195.989

Entry Price

198.500

Fundamentals

GBPJPY strengthened for a second consecutive session on Friday, holding steadily above the 195.00 level during Asian and European trading hours. The pair's advance was primarily driven by yen softness amid persistent uncertainty regarding the BoJ's future rate hike trajectory.

Data from the UK's Office for National Statistics (ONS) revealed May retail sales plummeted 2.7% MoM, significantly underperforming consensus forecasts of a 0.5% drop and marking the largest monthly decline since December 2023.

The contraction was led by a sharp 5.0% MoM fall in food store sales. This completely reversed April's 4.7% gain and represented the largest decline in this category since May 2021. Non-food store sales also declined, falling 1.4% MoM, reflecting weakened purchasing in department stores and household goods amid cautious consumer sentiment.

Despite the May setback, retail sales for the three months to May showed a 0.8% increase compared to the previous quarter ending February.

Ongoing challenges for the yen continued to underpin GBPJPY.

Minutes from the BoJ's May policy meeting showed the Policy Board remained vigilant towards "extremely high uncertainties" arising from global trade tensions. While the BoJ maintained its short-term policy rate at 0.5%, it substantially downgraded its economic growth and inflation outlooks, primarily citing expected negative impacts from anticipated US tariff hikes.

Members reiterated that further rate hikes would remain "appropriate" if economic activity and price developments align with projections, consistent with the path of gradual policy normalization. However, a core theme of the meeting emphasized the critical need for policy flexibility and data dependence. Several members stressed the importance of "carefully examining" the evolving outlook before taking action.

Many members cautioned that it was crucial to judge "whether the outlook... is materializing without any preconceptions." One policymaker acknowledged that the likelihood of projections being achieved was "not as high as before," while another emphasized the necessity of balancing upside and downside risks.

The minutes also revealed internal divergences. One member argued that policy must remain "flexible and more nimble," even as the BoJ enters a pause phase. Another member warned that simultaneous supply chain disruptions and surging inflation could entrap Japan's economy, especially given that "inflation expectations are not as well-anchored as in the US."

UK Retail Weakness Meets BoJ Policy Uncertainty, Yen Under Pressure_1

Technical Analysis

The intraday technical outlook for GBPJPY remains neutral-to-bullish. The pair breached the upper boundary of its triangle consolidation pattern twice (on June 10th and 17th), signaling a market inclination to extend the uptrend.

Provided the key support level at 193.75 holds, further upside is anticipated. A sustained break and hold above the 196.82 resistance would open the path for bulls to target the next resistance at 199.78.

Conversely, a decisive break below the 193.75 support would signal a potential near-term trend reversal, shifting the focus downwards towards testing the 191.85 support level.

Trading Recommendations

Trading Direction: Long

Entry Price: 196.00

Target Price: 198.50

Stop Loss: 193.49

Deadline: July 05, 2025, 23:55:00

Support: 195.53/194.58/194.00

Resistance: 196.68/196.84/197.06

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Economic

Summary:

The Euro edged higher against the U.S. Dollar on Friday, supported by a cooling in geopolitical fears and softer U.S. economic data.

BUY EURUSD

Close Time

CLOSED

1.15251

Entry Price

1.16867

1.14200

1.16641 +0.00215 +0.18%

74.6

Pips

Profit

1.14200

1.15997

Exit Price

1.15251

Entry Price

1.16867

The Euro continued to edge higher against the U.S. Dollar on Friday, navigating a cautious but supportive global landscape as traders digested a mix of geopolitical signals, diverging central bank outlooks, and a softening U.S. economic backdrop. Despite a muted trading session, EUR/USD maintained a firm tone near 1.1510, just off its intraday high of 1.1535, reflecting modest Euro strength amid Dollar softness.

The modest bid in the Euro was fueled in part by a dialed-down geopolitical tone from Washington. U.S. President Donald Trump, addressing concerns over escalating tensions in the Middle East, stated he would decide “within two weeks” on potential U.S. involvement in the ongoing Israel–Iran conflict. While uncertainty remains, the absence of immediate military action helped soothe global risk sentiment, reducing safe-haven demand for the Greenback.

The U.S. Dollar Index (DXY), a gauge of the greenback against a basket of major currencies, traded lower around 98.75 on Friday — slipping below the psychological 99.00 threshold. Investors took note of subdued U.S. economic data, particularly the Philadelphia Fed Manufacturing Index, which held steady at -4.0 in June, disappointing expectations for a slight rebound to -1. The flat reading signals continued weakness in the U.S. manufacturing sector, a drag reinforced by early signs of labor market softening and cooling domestic demand.

Combined with concerns over tariffs and geopolitical volatility, the Fed’s cautiously neutral tone earlier this week contributed to the Dollar's mild retreat. The central bank left its benchmark interest rate unchanged for the fourth consecutive meeting, keeping the federal funds target range at 4.25%–4.50%, as policymakers attempt to balance persistent inflation pressures with signs of a slowing economy.

Headline inflation in the U.S. edged up slightly to 2.4% in May, while core inflation held steady at 2.8%, still well above the Fed's 2% target. Fed Chair Jerome Powell, in his post-meeting remarks, emphasized the need for further data clarity, warning that renewed price pressures — including those stemming from higher tariffs or escalating geopolitical tensions — could delay the Fed's ability to cut rates.

Across the Atlantic, the Euro remains resilient, bolstered by easing inflation and an increasingly transparent European Central Bank (ECB) trajectory. Eurozone headline inflation dipped to 1.9% in May — below the ECB’s 2% mandate for the first time in several months — while core inflation also edged lower. The data, while encouraging, comes against the backdrop of spiking energy prices due to conflict-driven oil market volatility, raising concerns about a resurgence in input costs.

The ECB, which cut rates for the eighth time earlier this week, signaled it may be approaching the end of its easing cycle. Speaking from Italy, ECB Governing Council member François Villeroy de Galhau reiterated that while the door to further accommodation remains open, it would likely take a fresh external shock — such as a full-blown Middle East escalation — to materially alter the bank’s current course. Importantly, Villeroy also noted that the Euro’s relative strength against the U.S. Dollar could help mitigate the inflationary impact of rising oil prices, further reducing the urgency for deeper cuts.

Technical Analysis

From a technical perspective, EUR/USD continues to show strength on shorter timeframes, with price trading above the 50-period exponential moving average (EMA) and maintaining a bullish trajectory aligned with a key bias trendline. The 30-minute chart reveals a classic ABC corrective pattern, now completed with a low at point D — suggesting that the recent correction phase may be over.

Price action is currently flirting with the 1.1510 region, with upside potential targeting resistance at 1.16016 and 1.16311. A sustained move above these levels could open the path toward the 0.618 Fibonacci extension at 1.16867, which also aligns with a broader breakout zone.

That said, the Relative Strength Index (RSI) has entered overbought territory, hinting at a possible short-term pause or consolidation. Traders may want to wait for a retest of broken resistance or a minor pullback before considering long positions, especially as macro risk remains fluid.

TRADE RECOMMENDATION

BUY EURUSD

ENTRY PRICE: 1.1525

STOP LOSS: 1.1420

TAKE PROFIT: 1.16867

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

Despite a dramatic UK retail sales miss, the Euro failed to sustain gains against the Pound as the BoE’s hawkish pause provided Sterling with support.

SELL EURGBP

Close Time

CLOSED

0.85300

Entry Price

0.84000

0.85700

0.87501 +0.00185 +0.21%

40.0

Pips

Loss

0.84000

0.85701

Exit Price

0.85300

Entry Price

0.85700

The Euro (EUR) edged lower against the British Pound (GBP) on Friday, retreating modestly despite a sharply disappointing set of UK retail sales figures. While on the surface this data might have favored further Euro upside, the Pound proved resilient — buoyed by the Bank of England’s recent policy stance and underlying strength in investor sentiment.

At the time of writing, the EUR/GBP pair is trading near 0.8530, down slightly from recent two-month highs, as investors digest the implications of the latest macroeconomic releases and central bank signals. This comes after a two-week rally that saw the pair grind higher amid broader Euro strength and a mixed outlook for UK economic data.

Data from the UK Office for National Statistics (ONS) showed that retail sales volumes plunged 2.7% in May — a stark miss compared to market expectations for a 0.5% decline. This marked the steepest monthly contraction since December 2023, with all major categories — food, clothing, and household goods — registering notable pullbacks. On a year-on-year basis, sales fell 1.3%, erasing the strong 5% growth recorded in April and casting a shadow over the health of consumer demand entering the summer.

Despite this gloomy print, the British Pound remained firm. Much of this resilience can be attributed to Thursday’s Bank of England decision, where policymakers opted to keep the benchmark interest rate steady at 5.25%. The decision, while expected, signaled a continued commitment to a cautious, data-dependent approach. Crucially, the tone struck by Governor Andrew Bailey and other officials was less dovish than markets had anticipated, dampening expectations for an imminent rate cut and helping to anchor Sterling.

On the other side of the channel, the Euro’s retreat appears linked to shifting expectations around European Central Bank (ECB) policy. Several ECB officials — including France’s François Villeroy de Galhau and Spain’s Luis de Guindos — have signaled a growing willingness to cut interest rates further this year, as inflation continues to trend lower across the Eurozone.

Headline inflation dropped below the ECB’s 2% target for the first time in months, while core inflation — a closely watched gauge — also eased. This has increased the likelihood of at least one additional rate cut before year-end, following the ECB’s initial trim earlier in June. However, the Euro’s strength relative to peers — particularly the US Dollar and British Pound — remains a complicating factor. A firmer Euro can dampen imported inflation, thereby slowing the pace of policy transmission and further economic cooling.

Technical Analysis

From a technical perspective, EUR/GBP may be showing signs of exhaustion after a recent bullish trend. The pair had been trading within a rising channel — a classic bearish reversal pattern — and has now broken below the channel's lower boundary, suggesting downside risk may be building.

Currently, the pair is encountering resistance near its recent highs, which also coincides with key Fibonacci levels. A bearish RSI divergence has formed, indicating that momentum is waning despite recent price highs. Moreover, the break below the previous higher low structure on the chart suggests that the bullish bias could be fading.

Traders may look to initiate short positions via a sell-limit order around the 0.382 Fibonacci retracement level, aligning with the confluence of technical resistance and the broader macro narrative that hints at Euro vulnerability in the near term.

TRADE RECOMMENDATION

SELL EURGBP

ENTRY PRICE: 0.8530

STOP LOSS: 0.8570

TAKE PROFIT: 0.8400

Risk Warnings and Disclaimers

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Alan

Commodity

Summary:

Recently, the Federal Reserve maintained interest rates but delivered hawkish signals. Simultaneously, the fade of safe-haven sentiment triggered a pullback in gold prices. However, geopolitical risks have not entirely dissipated; if conflicts escalate, gold prices are likely to rebound.

SELL XAUUSD

Close Time

CLOSED

3358.97

Entry Price

3295.00

3390.00

4215.82 +17.91 +0.43%

310.3

Pips

Loss

3295.00

3390.00

Exit Price

3358.97

Entry Price

3390.00

Fundamentals

As of the European session today, gold traded around 3350.00 per ounce, marking a decrease of 0.71% on the day. This week is poised to be the first week of declines for gold since early June.

Recent volatility in the gold market stems from a complex interplay of factors. The marginal easing of geopolitical risks has been a core factor suppressing gold prices. US President Trump made a statement about deciding within two weeks whether to join Israel in potential strikes against Iran. This reduced market fears regarding a blockade of the Strait of Hormuz or attacks on nuclear facilities, leading to the partial unwinding of gold's safe-haven premium. Concurrently, some safe-haven capital has rotated towards silver, further diverting buying interest away from gold. Nevertheless, geopolitical risks persist; should conflicts escalate within the next two weeks, gold could regain upward momentum.

Furthermore, conflicting signals from the Federal Reserve have heightened market uncertainty. While the Fed held rates steady, Chairman Powell warned that President Trump's tariff policies could exacerbate inflationary pressures, suggesting potential variability in the rate-cut path. Current market pricing implies a roughly 70% probability of a rate cut in September. However, if next week's US Core PCE inflation data exceeds expectations, the Fed might delay its easing cycle, which would diminish the appeal of gold as a non-yielding asset.

Technical Analysis

Fed "Hawkishness" and Fading Safe-Haven Sentiment Trigger Selling Spree _1

Regarding the daily chart, gold has breached the crucial support level at 3372.17. Should it fail to close the daily chart above this level, gold has a higher chance to plunge shortly, heading towards the support at 3292.74. Plunging further lower could bring gold to the low of May 29 (3245.33).

A death cross is formed to suggest a stronger bearish momentum. While the RSI remains above the midline, its steeper downward slope indicates weakening bullish momentum and a gradual shift towards bearish dominance.

Selling at highs is preferred.