HORMUZ HEATS UP, GOLD COOLS DOWN
Geopolitical tensions around Iran and the rise in oil prices marked the first trading day of the week in global markets, while precious metals showed a diverging price action. Trump’s description of Iran’s latest response as “unacceptable” weakened expectations for a swift diplomatic solution. Continued risks around the Strait of Hormuz also revived concerns in energy markets. The rise in oil prices is increasing expectations that global inflation could reaccelerate and that central banks may keep interest rates higher for longer. For this reason, despite geopolitical tension, gold is struggling to escape the pressure from interest rates and the stronger dollar. Spot gold is trading around $4,666, down approximately 0.99%.
The April CPI data due on Tuesday, the PPI data on Wednesday, and retail sales figures on Thursday will be critical for gold to find its next direction. A stronger-than-expected data set could reinforce the higher-for-longer interest rate theme and increase pressure on gold. Softer data, however, could give gold some breathing room through lower rate and dollar expectations.
Silver, on the other hand, is showing a more resilient picture. It is trading around $80.23, down only 0.09%. The limited pullback compared with gold shows that silver is also being supported by its industrial metal profile.
Platinum and palladium, however, are showing a weaker performance. Platinum is trading at $2,026, down 1.41%, while palladium is at $1,466, down 1.82%. The decline in these two metals suggests that markets continue to price industrial demand more cautiously.
Today’s main question is this: Will Iran tensions push oil prices even higher, or will diplomacy step in and ease the pressure on precious metals? For now, the answer is not clear.
But current pricing tells us one thing: For weeks, gold has been pricing interest rates rather than the war, while silver is trying to hold its ground despite rate pressure, supported by the supply deficit and industrial demand.