Cautious Optimism Returns to Gold as June Begins

Over the past week, the gold spot price has risen to about $3,380/oz. One of the primary influences has been the lingering effect of May's ETF outflows, which totaled US$1.8bn globally, primarily from North American and Asian funds. This trend continued into early June, exerting mild downward pressure on gold prices as investor appetite for safe-haven assets temporarily waned.

Meanwhile, evolving expectations around U.S. monetary policy added complexity to the market. Recent economic data and cautious commentary from Federal Reserve officials suggested interest rates could remain higher for longer, pushing up U.S. Treasury yields and increasing the opportunity cost of holding gold—historically a headwind for bullion. On the geopolitical front, while a temporary pause in U.S.-China tariff tensions initially reduced market risk perception, renewed tariff threats from the Trump administration toward Europe and other trading partners later in the week may have restored some safe-haven demand. Simultaneously, gold prices have shown signs of consolidation near the US$3,250–3,400 range, following a flat performance in May and a strong surge in April.

Investor positioning has responded modestly, with slight increases in managed money long positions, though far below late 2024 levels, indicating a cautious but not bearish stance. In conclusion, while the gold market has steadied last week, it remains highly sensitive to developments in interest rate policy, trade dynamics, and investor flows. These factors are likely to dictate whether gold breaks higher or remains range-bound in the near term.