Gold and Silver Pull Back Amid Easing Tensions, Softening Safe Haven Demand

 

Gold and Silver Pull Back Amid Easing Tensions

(Bullion News Network) – The spot price of gold pulled back today, retreating for the second day in a row after losing another $53 per troy ounce. Gold is set to close nearly $90 lower than Monday’s closing price. Silver followed a similar trend, dropping $0.65/ozt on Friday. The gold-silver ratio remained largely unchanged, gaining just over 0.25 points to close the week at 90.81:1. Palladium prices also moved sideways during a muted trading day, while the spot price of platinum retreated by over $75 per troy ounce. The price action brought the two metals marginally closer to parity, although platinum is still leading palladium’s price by nearly $200 per troy ounce.

Demand for safe haven assets took a structural hit to end the week as geopolitical tensions appeared to ease. Most notably this news cycle, the United States and China have announced another trade deal intended to de-escalate tensions between the world’s two largest economies. Although the details of this a new agreement are sparse, U.S. Treasury Secretary Scott Bessent says that the deal will lead to speedier import of Chinese minerals into the United States. China also confirmed that the latest trade deal has been signed, which drove another set of record closes on Wall Street. 

In the Middle East, a ceasefire between Iran and Israel has held for another day. Despite pushback from some intelligence experts, the Trump administration has reaffirmed its position that its military strikes successfully destroyed Iran’s nuclear program. The United States and Iran are scheduled to meet next week amid the ceasefire, according to U.S. President Donald Trump, another potentially optimistic sign that the fragile peace deal could last. This proved to be another boon for Wall Street, which suffered earlier this month amid fears of another prolonged war in the Middle East.

Safe haven assets like gold and silver saw a structural hit to demand amid easing global tensions to end the trading week. Previously, the prices of gold and silver were largely buoyed by a range of conflicts around the world, as well as several trade wars sparked by President Trump’s historic slate of tariffs announced in February. 

Several key geopolitical and economic stressors remain, though. Just as the Trump administration confirmed a fresh trade deal with China, President Trump announced that the U.S. will cease its trade deal talks with Canada, paving the way for a potentially costly trade war between the two North American allies. The cause of the trade talk falter is a Canadian plan to levy an additional tax on American tech companies, a move that President Trump called a “direct and blatant attack on our country.” Canada responded this afternoon, announcing that the proposed digital services tax (DST) will move forward.

Speculation surrounding how the Federal Reserve will vote in July could also have a direct impact on gold prices, which have historically tended to thrive in falling-rate environments. Federal Reserve Chair Jerome Powell remains highly cautious, telling reporters at the FOMC’s June meeting that the committee is “well positioned” to respond to economic developments. President Trump has repeatedly criticized the economist, whom he appointed in 2018, for moving too slowly with easing interest rates. CME FedWatch projects an 18.6% probability that the Fed will vote to cut rates by 25 basis points when it meets on July 30th, up from 14.5% one week ago.

The outlook for precious metals heading into July will likely hinge on how these key stressors play out. Further escalations in the Canada-U.S. trade war, setbacks in trade talks between the United States and China, or another bout of fighting between Iran and Israel could potentially bolster demand for safe haven assets like gold and silver.