Gold and Silver Move Sideways Despite Rising Middle East Tensions

 

Silver Slides Despite Rising Geopolitical Tensions 

(Bullion News Network) – Gold and silver are set to begin the week on a muted note. Gold gained less than a dollar on Monday, hovering right above the $3,370 level after a series of trading days with little action. Silver prices budged a bit more, with the precious metal gaining $0.15 per troy ounce. The price action drove the gold-silver ratio marginally lower, pushing it 0.24 points lower to 93.17:1. Larger price movements happened in the platinum group metals market, with platinum and palladium both adding around $33 per troy ounce to their spot prices. 

The muted trading day comes on the heels of a major development in the ongoing conflict between Israel and Iran over the latter’s nuclear program, which proponents argue violates a 2015 agreement between Iran and several other nations. President Trump announced over the weekend that the United States conducted a series of strikes, successfully eliminating Iran’s major nuclear research facilities using large “bunker buster” bombs. The move exacerbated concerns that the United States might be pulled into a war with Iran, who vowed revenge after the U.S. intervention. 

Historically, geopolitical tensions and conflict have tended to increase demand for safe haven assets, including gold and silver. This relationship did not materialize today to start the trading week, with both gold and silver trading about even by market close. Gold opened nearly exactly even from Friday’s closing price before peaking at $3,391.37/ozt at around midday. Prices declined as the afternoon wore on, driving gold just under $20/ozt lower than the afternoon high. Silver followed a similar, though more minute-to-minute volatile, trend. The precious metal peaked shortly after market open, dipped, and then set a daily high at $36.34/ozt before sharply declining just a couple hours before market close.

Uncertainty concerning the ramifications of this recent development may be behind the muted response in the precious metals market. On Wall Street, the Dow and the United States dollar gained as traders bet on de-escalation. Iran retaliated against the U.S. missile strike on Monday, attacking an American base in Qatar. No casualties were reported, and U.S. President Donald Trump responded by calling the attack “very weak” and claiming that the country gave advanced warning before the attack occurred. Analysts say that the relatively muted response may be behind Wall Street’s performance today, as traders are likely betting on a de-escalation between the two nations. 

Wall Street’s hopes were bolstered again Monday evening after President Trump announced a ceasefire between Israel and Iran in a Truth Social post. 

CONGRATULATIONS TO EVERYONE! It has been fully agreed by and between Israel and Iran that there will be a Complete and Total CEASEFIRE (in approximately 6 hours from now, when Israel and Iran have wound down and completed their in progress, final missions!), for 12 hours, at which point the War will be considered, ENDED! Officially, Iran will start the CEASEFIRE and, upon the 12th Hour, Israel will start the CEASEFIRE and, upon the 24th Hour, an Official END to THE 12 DAY WAR will be saluted by the World. During each CEASEFIRE, the other side will remain PEACEFUL and RESPECTFUL.

While it is not yet clear whether the ceasefire will become a permanent truce, it could signal to markets that a larger de-escalation effort may be coming in the near future. Gold and silver prices traded lower after market close on the news, with gold losing $11/ozt and silver sliding $0.10 per troy ounce. The gold-silver ratio moved up marginally, gaining 0.06 points to open after-hours trading at 93.20:1. 

Later this week, several economic data reports will give traders more insight into the American economic situation. On Tuesday, investors will be able to read the June consumer confidence report, which analysts expect to increase 1.5 points from 98 to 99.5. A fresh GDP revision is due on Thursday, followed by another Personal Consumption Expenditures (PCE) index on Friday. The PCE is one of the Federal Reserve’s preferred measures of inflation, and this report should give traders a new hint about how the FOMC may vote when it meets again in July. 

Gold and silver both retreated after hours following President Trump’s ceasefire announcement.