Gold Prices Plunge Again, Returning to End-of-2025 Levels

Gold prices suffered another dramatic selloff on June 5, with international spot gold (London Gold) crashing 3.25% in a single day to close at $4,328.92 per ounce — wiping out nearly all of the metal’s year-to-date gains and sending prices back to levels last seen at the end of 2025. The sharp decline has shattered bullish sentiment built up over early 2026 and left investors scrambling to reassess the outlook for the precious metal.

What Triggered the Crash?

The primary catalyst was the U.S. May non-farm payrolls report, which significantly exceeded expectations. The U.S. Bureau of Labor Statistics reported that the economy added 172,000 jobs in May — nearly double the 88,000 that markets had anticipated — while prior months’ data was revised upward by a combined 93,000. The unemployment rate held steady at 4.3%, underscoring the resilience of the American labor market.

“The sharp drop in gold prices on June 5 was primarily triggered by the U.S. May non-farm payroll data significantly exceeding expectations, combined with upward revisions to prior data,” said Yu Xiaoming, Senior Investment Advisor at Shaanxi Jufeng Investment, as reported by Securities Daily via Sina Finance. “This reflects a strong U.S. labor market, leading the market to strengthen expectations that the Fed will maintain high rates or even restart rate hikes.”

The strong jobs data sent the U.S. dollar index (DXY) surging back above the 100-point mark, while the 10-year U.S. Treasury yield rose approximately 6 basis points to the 4.52-4.54% range. For gold, which yields no interest, the rising opportunity cost of holding the metal triggered concentrated long position liquidations.

Song Xiangqing, Vice President of the China Business Economics Society, explained to Securities Daily that “market expectations for a Fed rate cut have cooled while expectations for a rate hike have warmed. The 10-year U.S. Treasury yield has surged, and the dollar has strengthened in tandem. As a non-yielding asset, the opportunity cost of holding gold has increased sharply, triggering large-scale capital outflows.”

Broader Market Turmoil

The gold crash was part of a wider risk-off move that swept across global markets. Silver fell 8% in a single day, with a weekly drop of approximately 10%. Bitcoin briefly fell below $60,000 for the first time since October 2024. The tech-heavy Nasdaq Composite plunged 4.18%, while the Philadelphia Semiconductor Index crashed 10% — its worst single-day decline in six years — wiping out over $1 trillion in market capitalization, according to reports from Sohu.

Institutional Forecasts Diverge

In the wake of the crash, major financial institutions have revised their gold price forecasts, though opinions remain sharply divided:

• Commerzbank lowered its year-end 2026 gold forecast from $5,000/oz to $4,800/oz, while maintaining its 2027 year-end target of $5,200/oz.
• Morgan Stanley significantly cut its H2 2026 gold target to $5,200/oz.
• Goldman Sachs maintained a bullish outlook with a year-end 2026 target of $5,400/oz.

What Experts Say About the Outlook

Yu Xiaoming offered a cautious near-term view: “In the short term, gold prices are likely to remain weak, oscillating and building a bottom. Rallies should be viewed as corrective moves, not signals for blind bottom-fishing. In the medium term, as expectations for Fed rate cuts gradually build, combined with continued central bank gold purchases, gold prices are expected to recover steadily.”

Song Xiangqing expects gold to trade in a wide range of $4,200 to $4,700 per ounce over the next six to eight months, predicting neither a sustained one-way decline nor a rally.

China’s Central Bank Continues Gold Accumulation

Amid the volatility, the People’s Bank of China has continued its long-term gold accumulation strategy, having increased its gold reserves for 18 consecutive months as of April 2026, as reported by Financial Street. This ongoing central bank buying — part of a broader de-dollarization strategy — provides a structural support floor beneath gold prices, even as short-term sentiment remains fragile.

Key Variables to Watch

The trajectory of gold in the coming months will depend on several critical factors: upcoming U.S. inflation data, Federal Reserve policy signals, the strength of the U.S. dollar, continued central bank buying activity, and geopolitical developments — particularly ongoing tensions in the Middle East, which have pushed oil prices above $90 per barrel and added to inflationary pressures.

For investors, the message from analysts is clear: the era of easy gains in gold may be over for now, but the medium-term case for the precious metal — supported by central bank demand and eventual Fed easing — remains intact. Patience, rather than panic, may be the wisest strategy.