Gold retreats on Middle East escalation as oil and dollar rise in reaction

Outside Market Developments: Kinetic action in the Middle East is undermining hopes for a lasting U.S.-Iran peace deal. Israel's continued campaign against Hezbollah in southern Lebanon has created a noticeable wedge between President Trump and Prime Minister Netanyahu – a rift that could encourage Iran to hold out longer in negotiations.

The U.S. continues to strike Iranian military targets around the Strait of Hormuz. Iran has responded with missile/drone attacks on US-linked targets in the Gulf, including Kuwait and Bahrain. Flight operations at Kuwait International Airport are suspended following a drone attack that resulted in casualties.

At this point, it's tough to argue that the ceasefire is holding. Repeated tit-for-tat strikes between the U.S. and Iran, as well as Israel and Hezbollah, continue to erode the fragile truce and complicate efforts to negotiate a lasting peace.

Today's ADP report showed solid private-sector hiring in May. Private employers added 122k jobs, beating expectations of 117k and marking the strongest gain since January 2025. The print reflects ongoing labor market resilience heading into Friday’s official BLS jobs report.

Today's combination of resilient U.S. jobs data and escalating tensions in the Middle East is reinforcing hawkish Fed expectations. This dual pressure is keeping markets pricing in very high odds of no change at the 17-Jun FOMC meeting, and dimming expectations for any rate cut this year.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$29.10 (+0.95%)
5-Day Change: -$5.94 (-0.13%)
YTD Range: $4,100.32 - $5,595.02
52-Week Range: $3,256.02 - $5,595.02
Weighted Alpha: +26.31

Gold has slipped to new lows for the week, weighed by rising Middle East tensions that have lifted both oil and the dollar. The yellow metal is currently retesting its 200-day moving average during the historically weak cyclical period.



Geopolitical risk is bullish for gold in theory, but the resulting upward pressure on oil, heightened inflation expectations, and hawkish Fed signals have been driving selling pressure since the war began. In light of the most recent escalation, this trend seems likely to continue, although the March low at $4,100.32 still appears well protected at this point.

A close below the 200-day MA at $4,434.22 today would confirm a weaker tone within the lower half of the broad range, shifting focus to the $4,268.92 Fibonacci level initially. If Middle East de-escalation continues to be stymied, the $4,100.32 low would be vulnerable to a challenge.

On the other hand, revived hopes for peace and retracement in oil would likely set a more favorable tone within the range. A short-term move back above $4,600, and more importantly, a close above the 50-day MA at $4,632.59 would bode well for a return to the $4,800 zone, where the 100-day MA currently corresponds closely with the midpoint of the range.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.781 (-1.04%)
5-Day Change: -$0.920 (-1.23%)
YTD Range: $61.036 - $121.630
52-Week Range: $34.272 - $121.630
Weighted Alpha: +84.88

Silver is being pressured midweek by rising geopolitical tensions, a firmer dollar, and weaker gold. While new lows for the week have been established, last week's range is intact, with tech/AI optimism continuing to provide some underpinning.



Last week's low at $71.808 is vulnerable to a retest, and penetration would shift focus to the April low at $70.893. Below the latter, the $70 zone and the rising 200-day MA at $67.808 would be in play.

A rebound above $75 would be mildly encouraging, but a close above the 50-day MA ($76.155 today) and breach of Tuesday's high at $77.002 is needed to shift focus to the 20-day MA at $78.095. Above the latter, the 25-May high at $78.820 would be the attraction. This more bullish scenario is very much contingent on revived Middle East de-escalation optimism.

PGMs

Platinum and palladium fell to multi-week lows today amid broader precious metals weakness, higher yields, and a stronger dollar. However, both metals remain well above year-ago levels (platinum +75%+, palladium +33%)
due to persistent structural supply deficits and resilient industrial demand.


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.