Gold and silver pressured by reignited global energy security concerns

Outside Market Developments: Tensions between the United States and Iran escalated further over the weekend as Iran declared the Strait of Hormuz closed once again. The announcement has driven oil prices higher and reignited global energy security concerns.

Iran launched missile and drone attacks on U.S.-allied bases in the Gulf region, including sites in Kuwait, Bahrain, Jordan, and Oman. The U.S. conducted targeted strikes on Iranian military assets, including air defenses, radar sites, missile/drone capabilities, and small boats aimed at degrading Iran's ability to threaten shipping.

President Trump said today that he is “reinstating” the blockade on Iran in the Strait of Hormuz, positioning the U.S. as the "Guardian of the Hormuz Strait."  He added that a toll would be imposed on all cargo passing through the strait to cover U.S. security and operational costs.

Diplomatic efforts to de-escalate the conflict continue through backchannel talks and regional mediators, particularly Oman. The White House and Tehran are signaling willingness to negotiate on shipping security and broader issues – though significant trust gaps and competing demands make progress challenging.

Prospects for a 25 bps rate hike at the July FOMC meeting have risen to 39%, up from 34.2% on Friday and 25.7% a week ago. Fed funds futures now imply 37 bps of tightening by year-end.

This week, markets will closely watch key U.S. inflation data and the kickoff of Q2 earnings season. Tuesday brings June CPI figures, followed by PPI on Wednesday. Earnings begin with major banks like JPMorgan and Citigroup, with about 10% of S&P 500 companies reporting. Additional data on retail sales and housing will also be in focus, all set against ongoing Middle East geopolitical risks.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$47.75 (-1.16%)
5-Day Change: -$104.06 (-2.50%)
YTD Range: $3,945.52 - $5,595.02
52-Week Range: $3,270.50 - $5,595.02
Weighted Alpha: +9.29

Gold has retreated below $4,000, amid heightened Middle East tensions, attendant energy inflation worries, rising rate-hike expectations, and a firmer dollar. Lingering seasonal pressures persist as well.



The period through July historically sees the weakest average gold performance of the year. This stems primarily from seasonal weakness in global jewellery demand. Retail investors and traders in Western markets also tend to step away from their portfolios for vacations during this period.

With fewer retail buyers actively accumulating physical gold or trading ETFs, a natural lull in upward price momentum occurs. As noted in commentary last week, the yellow metal has not seen consecutive higher weekly closes since April. 

Beginning in August and September, the cyclical picture typically brightens with the start of the Indian wedding and festival season, which generates significant physical gold demand across South and Southeast Asia. Western investor liquidity tends to return around the same time as the vacation season winds down.

Global ETFs saw scant inflows of just 2.6 tonnes last week. It was only the third net weekly inflow since 01-May.

China, on the other hand, continued its gold-buying streak for the 20th straight month in June, with the PBoC adding another 15 tonnes to reserves. That’s their biggest monthly buy since October 2023, bringing China's total (officially acknowledged) stockpile to 2,346 tonnes.

The back below $4,000 puts the 30-Jun low at $3,945.52 back in play. New lows for the year would lend credence to the bearish scenario that suggests potential to chart/Fibonacci support at $3,887.03/$3,886.02.

On the upside, initial resistances at $4,050.00/54.75 and $4,080.35 protects today's overseas high at $4,107.71 and the falling 20-day moving average at $4,115.07. A close above the 20-day is needed to return focus to last week's corrective high at $4,201.70.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$1.282 (-2.15%)
5-Day Change: -$3.733 (-6.02%)
YTD Range: $55.666 - $121.630
52-Week Range: $36.287 - $121.630
Weighted Alpha: +24.95

Silver begins the week on defense as Middle East escalation revives inflation worries and bolsters hawkish Fed expectations and the dollar. Thus far, the white metal remains confined to last week's range.



If initial support at $57.248 gives way, it would leave the small double bottom at $55.727/666 vulnerable to a retest. Below the latter, a pair of Fibonacci objectives that correspond closely at $53.695/340 remain valid objectives.

Intraday resistance sits at $58.000/058, protecting the early U.S. session high of $58.752. Today's Asian high at $59.675 provides an additional intervening barrier ahead of the $60 level. Silver struggled to hold above $60 last week, keeping the near-term technical bias tilted to the downside.


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.