A BARREL OF OIL, AN OUNCE OF GOLD, AND A DELICATE DIPLOMACY STORY
Precious metals started the week in an atmosphere where hopes for peace and fears about interest rates are being weighed on the same scale. Today, there is no clear storm in the market, but rather a wind that is still looking for direction. In fact, this has been the case for weeks. On one side, the diplomacy table between the U.S. and Iran is being set again. On the other side, the hawkish shadow of the Fed continues to stay over gold.The market did not find the clear agreement headline it was expecting on June 21. A final agreement has not been signed yet. After the memorandum signed digitally on June 18, the weekend talks in Switzerland were important to see how the process will reflect on the ground.
The main result of the talks was a roadmap to reach a final agreement within 60 days. The creation of a communication channel for the safe passage of commercial ships through the Strait of Hormuz, and a mechanism to reduce tensions in Lebanon, were also among the concrete topics. So, what the market has in front of it is not a completed peace story, but a delicate diplomacy path that must be followed carefully. For this reason, although optimism can be felt in pricing, caution has not completely disappeared.
Gold’s story is not only about geopolitics. The main big test is still the Fed. Expectations that interest rates may stay high for longer continue to weigh on gold. Gold is trading at $4,191, down 0.67%. That is why the core PCE data to be announced this week is not just another data point. It will be the level where the market forms its new view about the Fed. A strong inflation figure may slow down gold’s upward moves again. Still, gold’s ground is not completely weak. Central bank purchases, especially the reserve diversification trend led by China, and the long-term positive expectations of major institutions continue to create a strong base under gold. In the short term, the cold breath of the Fed is still being felt. But in the long term, the quiet and steady buying of central banks keeps gold’s story alive.
Silver looks stronger than gold today. This metal, where industrial demand and investment interest meet, is positively diverging at around $66. On the platinum and palladium side, the picture is weaker. Platinum is down 1.14% at $1,674, while palladium is down 0.75% at $1,272.
So, in these days when the direction of the wind can change at any moment, which story will precious metals follow: the story of peace, or the shadow of interest rates?