A PAUSE, MANY QUESTIONS
The decision by the US and Iran to pause their attacks helped markets start the week on a calmer note. However, there is still no real ceasefire or official negotiation process. Iran says there are currently no talks with the US, while the US side continues to say that all options remain on the table. For this reason, markets seem to be pricing a temporary pause in the conflict rather than a lasting peace. The clearest impact of this pause was seen in oil prices. The decline in oil has slightly eased the inflation concerns that had increased in recent weeks. Gold is trading at $4,090, up 0.94%. Silver is at $59.20, up 1.77%. Platinum is trading at $1,637, up 2.98%, while palladium is at $1,283, up 3.10%.
The picture is more complicated for silver. Most silver is produced as a by-product of copper, zinc and lead mining. For this reason, it is difficult to increase silver supply quickly, even when prices rise. At the same time, demand remains strong due to solar energy, electric vehicles, semiconductors and data centres. The main risk is that solar panel producers have started to reduce the amount of silver they use. Some manufacturers are also moving towards copper-based solutions. However, total industrial demand is still very strong, so this shift is unlikely to close the supply gap in the short term. It is also becoming clearer why silver has not risen like gold during periods of war.
This week, all eyes will be on the Fed meeting. Markets mainly expect interest rates to remain unchanged. However, the possibility of a rate increase is being discussed again because of oil prices, new tariffs and strong demand. The Trump administration’s new tariffs on more than 80 countries may also create another inflation risk in the coming period. If energy, logistics and import costs rise at the same time, the Fed may need to keep interest rates higher for longer. For now, markets are taking a breath. However, for this relief to continue, stopping the attacks will not be enough. Shipping traffic in the Strait of Hormuz needs to return, oil prices need to remain lower and the Fed needs to avoid giving stronger tightening signals.