A WIND FROM HORMUZ
Precious metals started the week with a strong outlook. News about an agreement between the US and Iran was first seen as a sign that geopolitical risks may decrease. However, market pricing focused more on oil, inflation and interest rate expectations. With expectations that the Strait of Hormuz would reopen, oil prices fell sharply. This supported the view that global inflation pressure may ease. Gold increased to $4,330, gaining 2.63%. Under normal conditions, lower war risk after a US-Iran agreement could have put pressure on gold. However, this time the market focused more on oil and interest rate expectations. The fall in oil prices reduced inflation concerns. This also weakened the possibility of a Fed rate hike. Lower interest rate pressure and a weaker dollar supported gold. For this reason, the increase in gold was not only due to safe-haven demand, but also due to expectations of lower interest rates.
Silver also remained very active. The price increased to $70.41, gaining 3.54%. Strong demand for silver funds in China also accelerated the price movement. However, such a fast increase may also bring stronger volatility.
Platinum and palladium also started the week higher. Platinum increased to $1,775, gaining 3.39%, while palladium increased by 3.62% to $1,331. Strong buying across precious metals supported these two metals as well. In addition, demand expectations from the industrial and automotive sectors had a positive impact on prices.
Looking ahead, two main topics will be important. The first one is whether the US-Iran agreement will really be implemented and how quickly flows through the Strait of Hormuz will return to normal. Because reopening the strait and returning trade flows completely back to normal are not the same thing. Insurance costs, logistics confidence, port congestion and the rebuilding of physical flows may take time. The second important topic is the Fed. Messages from central banks this week may be decisive for the short-term direction of gold and silver, especially through interest rate expectations. Overall, the increase in precious metals does not seem to depend on only one reason. Lower geopolitical risks, falling oil prices, a weaker dollar, softer interest rate expectations and strong physical demand are all being reflected in prices at the same time.