Hello and welcome to our market week preview, where we take a look at the economic data, market news, and headlines likely to have the biggest impact on pricing and market momentum for gold, silver and platinum, as well as key correlated assets.
Gold Market
Gold prices reaccelerated from the Sunday evening open and into the start of US trading on Monday morning, spurred higher by news over the weekend that the US and Iran are moving to finalize a drafted peace agreement to replace the highly tenuous ceasefire between the two (with Israel an additional party to the US side.) Critically and different from similar headlines in recent weeks, the Iranian government has corroborated Washington’s announcement. As a result markets have swung quickly into a risk-on posture. Crude oil prives are declining sharply as investors and analysts slash projections for elevated energy costs from an extended conflict and closure of the Strait of Hormuz, and for the resulting inflation expectations. As part of the rebalancing gold prices have climbed as high as $4360/oz in spot trading while traders move to cover short positions in the yellow metal and other parts of the commodities and precious metals complexes. The (presumed) end of this US-Iran conflict removes from gold the geopolitical safe haven premium that, historically, tends to be a buy-signal. It has been well documented however just how little of a boon that had been to gold since March as the proportional increase in inflation expectations has weighted the precious metal down more. The presumed fundamental input that will keep a floor underneath gold prices now is monetary policy expectations, as the market has now discounted chances of a rate hike this week entirely, and may begin to move back towards expectations of 2 rate cuts before the end of the year. This change makes Wednesday’s FOMC announcements, the first under new Fed Chair Kevin Warsh, the crux of this week’s scheduled data and reporting.
Silver and Platinum Markets
Other members of the precious metals basket have benefited from the same shifting winds as gold and are moving to higher prices on-net as compared to Sunday’s opening bids. It appears that the un-blocking of global manufacturing assumed to follow shortly behind the opening of the Strait of Hormuz and the (semi)permanent end of open war in Iran may be injecting even more volatility into prices than the monetary policy considerations the lend to rising gold prices. Silver, the precious metal most tied into industrialization as an input was at one time the strongest gainer on the day at a high-tick of $71/oz in spot markets (although that mantel as been taken over by platinum, up nearly +4% on the day at $1775. The manufacturing premium has been reeled back for both, and silver and platinum as of midday have seen a considerable retraction from the day’s peaks that gold so far has avoided. Looking forward for the week we anticipate both to trade somewhat in tandem with gold and its monetary policy reaction functions, while silver may have increased volatility around US and global manufacturing sentiment.
US Macro Data to Watch
Wednesday, June 17 at 2pm ET // FOMC Interest Rate Decision
[No meaningful change to monetary policy is expected.]
And that’s how the precious metals basket is performing to begin the week. As always, we wish you all the best of luck in your markets in the coming days, and we’ll look forward to seeing you all back here next week for another metals market preview.
