Next week, the most powerful man in global finance
Kevin Walsh
will make his first FOMC appearance
But before the head coach even officially took the stage
Last night, the U.S. May inflation data came out
and immediately issued a death red card to the market
As soon as the data was released
The whole market was shocked to the core
Assets sold off indiscriminately
Gold, stocks, bonds all took a nosedive
Collective plunge, no one spared
Next week's Walsh debut
is happening under this explosive atmosphere
It feels like a match stuck at 0-0 at the 90th minute
Suddenly awarded a penalty kick
This is no coincidence
There's more than meets the eye
Who exactly is Walsh?
Why, when news of his nomination leaked in late January
Gold plummeted 13% that day
Silver crashed 35% in one day
Investors were left questioning their existence
A week later, the FOMC
Will it be the last straw that breaks the bull's back?
Or the signal flare for gold's counterattack?
In today's episode of our Alchemy Research Lab
We'll thoroughly dissect
The macroeconomic landscape on the eve of Walsh's debut
Helping you understand the secrets behind these cold data
What are the big shots on Wall Street
Really scheming?
And in the coming week
How should you write your trading script?
So you won't get shaken out by the big players
Okay, let's officially begin
Before we dive into Walsh's Thanos-level influence
Let's first look at how brutal gold's technical picture is
On the daily chart
Gold plunged over 4.5% yesterday
Broke straight through the low of the Q1 trading range
$4,098
This morning
Asian session gold continued lower
Hitting a low of $4,024
Almost within striking distance of the $4,000 round number
Although there appears to be some buying near 4,000 trying to defend
I want to warn everyone
This is very likely just a dead cat bounce
Until gold reclaims
$4,200
The $4,000 level
will continue to face the risk of being tested
and even broken
Regular viewers of our channel
should know
Since late March
I've been pointing out the descending channel in the charts
It's not that I intentionally want to create panic
Nor do I want to be the bearer of bad news
But friends
Look at the structure of this channel
If price continues to follow this channel
Then the probability of breaking below $4,000 later
Frankly speaking
is quite high
Do you think the $4,000 round number will hold?
Or do you believe this decline is far from over?
Tell me your thoughts in the comments below the screen
Let's brainstorm together
Okay let's continue
Many people still don't understand
Why a Fed chair nomination
can shake the market this much
The story goes back to January 30th this year
Gold crashed 13% in one day
Silver plunged 35%
If you were there
That scene is unforgettable
And the trigger for all this
was the leak that Kevin Walsh would be
nominated by Trump as Fed chair
OCBC strategist put it bluntly
The market had been looking for a reason
to end the parabolic
crazy rally. Walsh's nomination was that reason
In plain English
Gold had risen too absurdly
The whole market knew a crash was imminent
Everyone was just waiting for an excuse
And Walsh was the perfect excuse
So how hawkish is Walsh's track record?
Friends, this is key
During his tenure as Fed governor from 2006 to 2011
He had almost zero tolerance for inflation
Any slight uptick in prices and he'd call for rate hikes
Deutsche Bank even analyzed that
Walsh might adopt a very unique policy mix after taking office
Cut rates while shrinking the balance sheet
You need to know
This has hardly ever happened in history
Rate cuts soothe the economy
But shrinking the balance sheet pulls money out of the market
The core aim of this policy mix is one thing only
Support the dollar while suppressing inflation
But here's a very interesting contradiction
You must know
Walsh was a staunch ally of Trump during the campaign
He supported tariffs
Criticized the Fed for cutting rates too slowly
Politically, they were almost in lockstep
But what the market fears most
is that like Powell back then
Once he sits in the chair
He'll immediately flip and show central bank independence
Remember
Trump originally nominated Powell
Thinking he would toe the line
And advocate low rates
But Powell still hiked when needed
Completely ignoring Trump's tweets
So what is the market afraid of?
Afraid that Walsh
to prove he's not Trump's puppet
will act even more hawkish than anyone else
And fight inflation even harder
This is classic uncertainty premium
Directly reflected in gold's crash
Now the whole market is asking the same question
At next week's FOMC meeting
What will Walsh actually say?
How hawkish will he be?
Last night's May CPI surged to 4.2%, a 3-year high
Many reacted by thinking it's over, inflation is out of control
The Fed will absolutely hike aggressively
But don't panic, this is actually an illusion
Looking at the data, over 60% of this inflation was driven by the energy surge
Due to the US-Iran conflict and the Strait of Hormuz crisis
Supply was choked off, this is not demand overheating
Now look at core CPI excluding energy and food
While the annual rate is 2.9%
The monthly gain has slowed to 0.2%, below expectations
This shows the real momentum of US price increases is actually cooling quietly
Employment data can also be deceiving
May nonfarm payrolls surged by 172,000
Blasting past the expected 80,000, seemingly red hot
But the devil is in the details
The new jobs were concentrated in a few sectors
And the labor force participation rate is still falling
The US job market is not that strong
It even shows structural weakness
Next, this angle
99% of financial media calling for rate hikes won't tell you
The US government's wallet simply can't handle aggressive rate hikes
US national debt now stands at $39 trillion
Interest payments alone exceed $1 trillion per year
That's more than any single budget item like defense or healthcare
Fed Chair Walsh, no matter how much he wants to establish credibility
Faced with this fiscal black hole, he'll have to think twice
Every quarter-point rate hike
Means the government pays hundreds of billions more in interest
Who can bear that fiscal risk?
The most anomalous signal is still ahead
Goldman Sachs just removed all rate cut expectations for 2026
But guess what?
They still hold gold price target at $5,400
Compared to current levels around $4,100
That's still 30% upside
This is not schizophrenia
Goldman is actually betting on the scariest scenario
Stagflation
The economy stalls
But prices keep soaring
In that environment, real rates are compressed, dollar purchasing power erodes, and gold becomes the ultimate safe haven, ushering in a super bull market.
Of course, Wall Street is also a battlefield of titans. Citi is taking the opposite view, cutting year-end gold forecast to $4,000, with extreme downside to $3,500. What logic lies behind this massive divergence?
To understand the cards these big institutions hold, I strongly suggest watching our video from two days ago, which offers the deepest analysis and comparison.
Okay, let's shift our lens to the stock market, because stock market moves are closely tied to gold.
Last night the Dow plunged 950 points, and the S&P 500 has evaporated $3.3 trillion in market cap since its all-time high on June 2.
Importantly, even the Dow, which is heavy on defensive stocks, fell nearly 2%. You see, in a typical pullback, money flows from tech to defensive stocks, and the Dow usually holds up better.
But yesterday, not everything died together. BTIG's analyst directly...
Used one word to describe it
He called it a position liquidation
Not a trend change
What does that imply?
It implies this selloff may not be over
So what does this have to do with gold?
Plenty
If stocks continue to decline
Institutional investors, facing huge redemption pressure
And margin calls
They will be forced to deleverage
What does deleveraging mean?
It means selling everything
Stocks, bonds, gold, everything that can be liquidated
So in an environment of extreme panic
Gold sometimes falls together with stocks
Because it's being used as an ATM
This is what we've been seeing recently
Gold and US equities moving in tandem
Completely losing its safe-haven function
But pay attention to this twist I'm about to say
This is critical
Once the FOMC meeting is over
If the market finds
Walsh is not as hawkish as feared
For example, the dot plot doesn't show a rate hike this year
Or his speech retains policy flexibility
Those rate hike expectations that have been priced in
Will be re-priced
So next week's FOMC is actually a huge binary bet
The market has already priced in the worst-case scenario
For traders, this is a key juncture worth close attention
One last geopolitical variable
I want to remind everyone
Trump's threats against Iran
Have escalated to what level?
From a few days ago saying a deal could be reached in two to three days
To today threatening to bomb Iran's power plants and bridges
Even saying directly that they will very fiercely attack Iran's civilian infrastructure
This means the conflict is expanding from military targets to civilian economic targets
The level has completely changed
Last night's EIA data showed
US crude inventories fell by 7.227 million barrels
Far exceeding expectations
Oil prices reclaimed above $90
At one point rose over 4%
Higher oil prices make inflation harder to control
If inflation can't be brought down, the Fed can't cut rates
But can we expect Walsh to hike rates to fight the Strait of Hormuz?
That's simply impossible
Interest rate policy and geopolitics are two completely different arenas
This is the ultimate dilemma Walsh now faces
Hiking rates to fight inflation would crush US fiscal health
Not hiking, and inflation expectations may spiral out of control
Both sides are cliffs, he stands in the middle
In fact, the oil problem is far more serious than most imagine
We discussed in detail in our June 9 video
The risk of oil prices spiking in the next two months
Is currently severely underestimated by the market
Interested viewers can go back to watch that video
I won't expand on it here
Having said that, I want to ask another question
In his first FOMC, do you think Walsh will choose to be a super hawk that scares the market?
Or will he surprise everyone
By showing a degree of moderation and pragmatism?
Tell me your judgment in the comments
Friends, we've reached a critical watershed in the script ahead
Next week, Kevin Walsh's FOMC debut
Will directly determine gold's
Life or death situation going forward
If Walsh's tone is extremely hawkish
The dot plot clearly indicates rate hikes this year
And the press conference shows no room for reversal
Then gold will likely lose the $4,000 round number
In this scenario of seeking a bottom
Technically, we might need to see $3,800 or even $3,600
Before real resistive buying emerges
But the market always has another possibility
That the FOMC outcome is not as scary as expected
If the Fed holds steady
And Walsh releases a dovish flexibility of continuing to observe data in his press conference
Then, because the market has already priced in the worst hawkish expectations
Once bad news is out of the way
Short-side momentum will quickly exhaust
Triggering a massive wave of short covering
Propelling gold and silver into an explosive rebound
Here we want to especially remind trading market participants
In the reversal scenario
Silver's upside elasticity will absolutely exceed gold's
This has nothing to do with fundamental merits
Purely because silver short positions are now too crowded
Silver from the year high of $121
Has crashed to around $60, almost halved
Once sentiment reverses
Those trapped or forced-to-cover shorts
Will create extremely concentrated and violent buying pressure
This risk/reward difference is definitely worth noting
But no matter how the short-term script plays out
One bottom line is certain
The structural bull case for gold remains unchanged
Let's just look at what global central banks are doing
In Q1 2026
Global central banks bought 244 tonnes of gold
In April they added another 17 tonnes
China's PBOC has been piling on for 18 consecutive months
Poland, India and others haven't slowed down either
These sovereign buyers are absolutely not speculating on short-term moves
They are executing a decades-long strategic asset reallocation
Their ultimate goal is to raise gold's share of total reserves
To 60% or even 70%
Compare that to China's current ~9%
And Poland's ~30%
This sovereign buying force is far from exhausted
Add in the repricing of global geopolitical risk premiums
The macro environment is undergoing a massive shift
We did an in-depth analysis of the historic gold transfer from the Bank of France in late January
We did an in-depth analysis of the historic gold transfer from the Bank of France in late January
Germany still has over 1,200 tonnes of gold stuck in New York
Daring to move it
Plus the risk of the Iran conflict spiraling out of control at any time
In such a macro landscape
To expect gold to turn bearish
Clearly defies objective logic
In summary
Walsh's debut is destined to trigger a huge volatility
But regardless of how short-term market washes out
Three underlying logics support the big trend
First
Current inflation is supply-side driven
Not demand overheating
This naturally limits the Fed's hawkish room
Second, the $39 trillion US debt black hole
Means the interest rate ceiling cannot rise indefinitely
Finally
The global central bank gold buying wave is only at the halfway point
The best is yet to come
At this level
Are you bullish or bearish?
Feel free to shout out your trading logic in the comments
That's all for today's episode
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We will continue to use the most down-to-earth institutional perspective
To help you dissect the underlying logic of global finance
Finally, a risk disclaimer
All content in this video is our team's market observation and logical deduction only
And does not constitute any form of investment advice
The current financial market is rough and risky
Historical-level volatility brought by geopolitical conflicts and macro policy shifts is not easy to navigate
Always maintain independent thinking when trading
Prepare a comprehensive plan in advance
Do not blindly chase ups and downs
And never go all in on a single position
See you next time
