U.S. Stocks, Gold Prices Plunge Amid Market Volatility
2min read U.S. stocks experienced significant volatility overnight, with a late-night low open followed by a full-line pullback and subsequent decline. Chinese companies listed in the U.S. saw substantial losses, with the Nasdaq Golden Dragon China Index dropping by more than 1%. Notable decliners included Xpeng, which fell by over 7%, ATESS, which declined by more than 5%, and BOSS Zhipin, which dropped by over 4%.
Gold prices, which had been on an upward trajectory, also saw a sharp decline. The precious metal broke below $3,300 per ounce, marking a significant reversal from its recent gains. This drop came despite gold having reached a near two-week high earlier in the day, driven by investors seeking alternatives to U.S. assets amid market uncertainties.
The volatility in gold prices was not an isolated event. The commodity market as a whole experienced turbulence, with international oil prices also seeing a substantial drop. The ICE Brent crude oil futures contract fell by 0.86%, while the NYMEX WTI contract also declined.
The recent fluctuations in gold prices have been attributed to a variety of factors, including changes in trade war risks and shifts in investor sentiment. While short-term factors such as the reduction in trade war risks and a temporary decrease in investor demand for safe-haven assets have contributed to the recent volatility, long-term influences such as the trajectory of the U.S. dollar and government debt levels are expected to continue shaping gold prices.
In other news, the U.S. House of Representatives passed a bill early Thursday that includes tax cuts and increased military spending. This legislation, if approved by the Senate, could add tens of billions of dollars to the U.S. government's debt and widen the budget deficit. This development comes amid concerns that the Trump administration's tariff policies could reignite inflation, putting pressure on bond prices and driving up yields.
Additionally, the U.S. reported a significant drop in initial jobless claims, with 227,000 people filing for unemployment benefits last week, down from 229,000 the previous week. This data surprised the market, as it indicated that the U.S. labor market remains robust despite growing economic uncertainty due to the Trump administration's trade policies. Furthermore, the U.S. May S&P Global Manufacturing PMI preliminary reading was 52.5, exceeding expectations of 50.1 and up from the previous reading of 50.2. However, April existing home sales totaled 4.00 million units on an annualized basis, missing the forecast of 4.10 million units and down from the previous 4.02 million units.
On the monetary policy front, Federal Reserve Governor Christopher Waller stated that a rate cut is still possible later this year, provided that the Trump administration's tariff policies stabilize at a lower level. Waller suggested that if tariffs are reduced to around 10% and confirmed by July, the U.S. economy would be in good shape, potentially supporting a rate cut in the second half of the year.
