FED WEEK UNDER THE SHADOW OF HURMUZ
Precious metals started the week on an uncertain note. In the latest pricing, gold is trading at USD 4,714/oz, up 0.11%; silver at USD 75.90/oz, up 0.33%; platinum at USD 2,023/oz, up 0.46%; while palladium is down 0.91% at USD 1,492/oz. The gold/silver ratio has declined by 0.16% to 62.08. The main market focus remains the U.S.–Iran front. Iran’s new proposal, reportedly delivered through Pakistani mediators, gave markets some short-term breathing room. The proposal envisages first reopening the Strait of Hormuz, then moving toward an end to the war or a long-term ceasefire, while leaving nuclear negotiations for a later stage. This picture tells the market that “there may be room for a solution,” but it has not yet reached the point of “an agreement has been reached.” For the U.S., Hormuz and the maritime blockade remain among the most important pressure tools against Iran. Gold is therefore caught between two opposing forces.
A weaker dollar and geopolitical risk support prices, while inflationary pressure stemming from higher energy prices strengthens expectations that the Fed may remain more cautious on rate cuts. This, in turn, limits gold’s upside. The most critical theme this week will be the Fed. In fact, rather than the rate decision itself, markets will likely focus on how the Fed assesses the rise in oil prices. If energy prices remain elevated due to the Iran war, this could push inflation higher again. If Powell strongly emphasizes this risk, it may be interpreted as a signal that the Fed is in no rush to cut rates. This could create pressure on gold.
On the silver side, the picture looks livelier compared with gold. China’s silver imports in March came in above the average of the past 10 years. Behind this strong import demand are retail investors turning to small silver bars as an alternative to expensive gold, and Chinese solar manufacturers front-loading production ahead of the removal of export tax rebates. This data strengthens the narrative of physical tightness in the silver market.
So, what will determine gold’s direction this week: safe-haven demand, or the Fed’s inflation message?