Gold suffers worst sell-off since March! Wall Street veteran Yardeni: The next support level may be at $4,000

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The gold market suffered a heavy setback this week, with strong employment data boosting the dollar and rising Treasury yields putting pressure on this non-interest-bearing asset. Senior strategists warn that this round of decline may not be over yet.

On Friday, gold futures plunged 3% in a single day, marking the largest daily drop since March 26. The weekly loss amounted to 4.9%, the biggest weekly decline since the week of March 20. On Monday, gold futures further dipped, widening the loss at one point, before narrowing to about 1%, closing at $4,321.80 per ounce.

Ed Yardeni, founder of Yardeni Research, stated in a Sunday report to clients that gold on Friday had broken below a key technical level—the 200-day moving average at $4,443.4—and judged "the next support is at $4,000."

Despite this, Ed Yardeni said he has not abandoned his bullish stance on gold, maintaining his year-end target price of $5,500 and ten-year target price of $10,000 unchanged. Meanwhile, the slump in silver was even more brutal: On Monday, it dropped 2.4% to $67.41 per ounce. Previously, on Friday, it plunged 6.5%, posting the largest daily drop since May 15.

Employment Data Exceeds Expectations, Rate Reversal Pressures Gold Prices

The direct trigger for this round of gold sell-off was the strong performance in the US May employment report. Data beat expectations, strengthening the market's view that the US economy is resilient and does not need rate cuts.

Since gold does not generate interest income, a rising interest rate environment typically suppresses its value. Boosted by the employment data, the US 2-year Treasury yield jumped to 4.160% on Friday, the highest since February 24, 2025, and further rose to 4.178% on Monday. Meanwhile, the ICE Dollar Index hovered above 100 on Monday, which, if maintained until close, would mark the highest closing level since March 30.

Technical Weakness, Accumulated Long Positions Pose Risks

Besides macro factors, technical fragility also intensified this decline. Ole Hansen, head of commodity strategy at Saxo Bank, pointed out that investors have recently poured into the gold market, sharply reducing short positions, while long buying has clearly increased.

This position structure makes gold "more prone to technical corrections once key support levels are broken." Hansen said the current technical chart of gold has clearly turned unfavorable.

Yardeni Maintains Long-Term Bullish Outlook; Iran Situation Is Key Variable

Despite short-term pressure, Ed Yardeni has not changed his long-term optimistic outlook for gold. He believes that once the Iran war ends, gold's rally should resume, keeping his year-end target at $5,500 and ten-year target at $10,000 unchanged.

It is worth noting that gold has accumulated a decline of about 0.2% this year to date, after surging more than 70% in 2025. In Ed Yardeni's view, the current pullback is more of a short-term disturbance rather than a trend reversal, but whether the $4,000 level holds will be the core focus of the market in the near future.

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