Gold’s Worst Month in Years: Ceasefire, Hot Jobs Data Overwhelm Safe-Haven Appeal

Gold tumbles 11.7% in 30 days, breaking below $4,200 and its 200-day MA as geopolitical tensions ease and strong US jobs data keep Fed hawkish, despite record physical demand.

Gold has suffered its steepest monthly tumble in recent memory, sliding below $4,200 and breaching its 200-day moving average for the first time since 2022. The precious metal now trades at $4,189 an ounce, marking an 11.73% loss over the past 30 days and a 4.6% decline year-to-date. The sell-off has accelerated even as physical demand hits record levels, underscoring a sharp disconnect between the paper and physical markets.

Two forces have combined to crush the safe-haven bid. A partial ceasefire between Iran and Israel has defused the immediate geopolitical crisis, unwinding the risk premium that had been priced in after earlier US military strikes and the closure of the Strait of Hormuz. That earlier escalation had pushed Brent crude above $95 a barrel, feeding inflation fears that paradoxically hurt gold by keeping interest rates elevated. Now, with tensions easing, that premium has evaporated.

At the same time, the US labour market continues to roar. May produced 172,000 new jobs, roughly double the 85,000 economists had expected. A robust economy gives the Federal Reserve little reason to cut rates, and rate futures now imply the federal funds rate will end the year at around 3.87%. Higher interest rates raise the opportunity cost of holding gold, which offers no yield.

Technicians are flashing warning signals. The breach of the 200-day moving average – a widely watched trend indicator – marks the first such break in nearly three years and is viewed as a bearish trigger. The relative strength index has sunk to 27, deep in oversold territory. While that could fuel a short-term bounce, analysts caution it does not guarantee a trend reversal. A meaningful recovery would require reclaiming the $4,100–$4,200 zone, levels that have now been lost.

Institutional investors are repositioning accordingly. JP Morgan has slashed its average price forecast for 2025 to $5,243 from $5,708, citing waning investor demand. Yet the bank remains optimistic for year-end, sticking to its $6,000 target on the back of the ballooning US national debt, which it argues will drive long-term monetary debasement. For now, though, the short-term picture is dominated by a hawkish Fed and fading geopolitical risk.

The physical market tells a different story. Central banks added a net 244 tonnes of gold in the first quarter, according to the World Gold Council, with April alone contributing 17 tonnes – including 14 tonnes from Poland and 8 from China. These purchases are part of a structural shift away from dollar reserves. Meanwhile, investment demand for bars and coins surged to 474 tonnes in the quarter, the second-highest on record, as buyers in China and India stepped in to absorb the sell-off. Jewelry demand, by contrast, has wilted under historically high prices.

The divergence between physical buying and speculative selling represents a fundamental tension. Central bank hoarding and retail accumulation in Asia provide a floor, but they cannot stop the momentum of futures-market liquidation. For gold to stabilise, the macroeconomic backdrop needs to shift – and that will require either a clear dovish pivot from the Fed or a fresh geopolitical shock that reignites safe-haven flows. Until then, the path of least resistance remains lower.