Gold and silver under pressure as revived inflation worries trump Middle East escalation

Outside Market Developments: The U.S. launched retaliatory strikes against Iran in response to attacks on commercial shipping in the Strait of Hormuz. Regarding the 60-day ceasefire formalized with the signing of the MOU on 17-Jun, President Trump said, "As far as I’m concerned, it’s over.” 

The U.S. quickly moved to revoke Iran's temporary license to sell its oil. It also reimposed broad secondary sanctions on anyone (including foreign companies and banks) buying, financing, or shipping Iranian oil. Brent crude is up more than 10% over the past two days, pressuring $80.

The status of the indirect negotiations in Doha is unclear at this point. While neither party has formally walked away from diplomacy, President Trump said further talks are a "waste of time."

This is restoking inflation concerns and hawkish Fed expectations. Bond yields are edging higher, and the dollar index set a new high for the week. Prospects for a rate hike at the July FOMC meeting are now at 30.5%, up from 26.7% yesterday and 14.5% a month ago.

Discussions at the NATO summit in Turkey have focused on “burden-sharing,” with the U.S. pushing Europe to take on more responsibility, while addressing ongoing security challenges in Ukraine and the Middle East. Emphasis is on implementing last year’s commitments, particularly the new 5% of GDP defense spending target by 2035. Overall, the tone has been one of unity. 

Chip/tech stocks are under pressure amid ongoing rotation out of AI names. Broader indices (DJIA, S&P 500) are seeing mild declines or consolidation after recent records.

It's a relatively quiet day for U.S. economic data. Wholesale inventories for May were weaker than expected. MBA data for the week ending 3-Jul saw mortgage applications fall 2.2%, with the refinance index dropping notably while purchase activity remained soft amid elevated rates.

Consumer credit for May comes out later. The Fed's June FOMC minutes are scheduled for release at 12:00 PM ET and will be the main focus, with markets watching for any clues on the rate path amid recent inflation and labor data.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$53.18 (-1.30%)
5-Day Change: +$14.24 (+0.35%)
YTD Range: $3,945.52 - $5,595.02
52-Week Range: $3,270.50 - $5,595.02
Weighted Alpha: +8.68

Gold is back under pressure amid rising Middle East tensions and the rebound in oil prices. Yields and the dollar are rising as well, applying additional pressure. More than half of the recent bounce has already been retraced.



Revived inflation risks associated with oil prices and the reinforcement of higher-for-longer Fed expectations are overwhelming any haven bid tied to heightened geopolitical tensions. Scope is seen for further retracement to the $4,000 zone, and below that, last week's low at $3,945.52 would be back in play.

I continue to believe new lows for the year, and a challenge of chart/Fibonacci support at $3,887.03/$3,886.02 is a short-term probability before we start seeing cyclical buying later in the summer. The outlook could certainly become more bearish if Middle East tensions escalate further, oil heads toward $100, and the trade starts pricing greater expectations of Fed tightening.

Despite global gold ETF holdings suffering a significant outflow of $8.9 bln in June, overall flows for the first half of 2026 managed to remain positive at $8 bln, according to World Gold Council findings. This H1 resilience was heavily anchored by record-breaking inflows into Asian funds, which successfully countered the largest H1 North American outflows since 2013 (-$7.7 bln).

The WGC also noted that global gold market liquidity surged to unprecedented heights in H1 2026, reaching an all-time high average of $488 bln per day. This historic trading activity was exceptionally broad-based, fueled by robust institutional over-the-counter (OTC) volumes and a massive 73% year-over-year jump in gold ETF trading.

If this flare-up between the U.S. and Iran is short-lived and they return to the bargaining table, causing oil prices to ease again, gold could go back on the bid. Initial resistance is at $4,093.00/$4,096.97, call it $4,100. Above that, today's overseas high at $4,133.73 – which now corresponds closely with the 20-day MA) protects highs from earlier in the week at $4,179.79 and $4,201.70. More substantial resistances are found at $4,218.41 (22-Jun high) and $4,318.41 (17-Jun high).


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$1.583 (-2.64%)
5-Day Change: -$0.743 (-1.26%)
YTD Range: $55.666 - $121.630
52-Week Range: $36.287 - $121.630
Weighted Alpha: +24.68

Silver has traded lower every day this week, despite the nine-session high set on Monday. More hawkish Fed expectations, a higher dollar, and the latest revival of tech/AI valuation worries are weighing on the white metal.



I noted earlier in the week that I was not impressed with the momentum of the recent rebound, and that the 20-day moving average successfully contained the upside. This suggested to me that upticks were corrective in nature. With more than 78.6% of that rally already retraced, a retest of the small double bottom at $55.727/666 seems likely.

Intraday highs from early in the U.S. session at $58.951/954 and $59.032 define initial resistance. Today's overseas high at $61.023 looks pretty well protected at this point.

Like in gold, swift de-escalation in the Middle East could change the picture quickly. Be prepared for ongoing volatility.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.