Gold steadied Monday on safe haven demand as traders awaited Iran’s response to the U.S. joining attacks against the Islamic republic over the weekend.
The U.S. attacked Iran’s three main nuclear facilities over the weekend, and Iranian leaders vowed to retaliate. The dollar and oil prices jumped amid threats to energy supply and shipping through the Strait of Hormuz. The potentially higher prices for goods could spur U.S. inflation, making the Federal Reserve less likely to implement long-expected interest rate cuts this year. Lower interest rates are typically bullish for gold.
But the markets were jittery, with gold futures remaining near record highs, sustained by haven investors. The yellow metal is a traditional hedge against geopolitical and economic uncertainty.
August gold futures fell 1.9% last week to settle at $3,385.70 an ounce on Comex, after the front-month contract dropped 0.7% Friday. Bullion slipped 0.1% last month after increasing 5.4% in April and gaining 11% in March. It’s up 28% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The August contract is currently up $3.50 (+0.10%) an ounce to $3389.20 and the DG spot price is $3380.50.
Iranian officials have said the country “reserves all options” after the U.S. entered the conflict with warplanes and submarines targeting three facilities in Fordo, Natanz and Isfahan. The Islamic republic launched retaliatory strikes into Israel. U.S. President Donald Trump has said any Iranian retaliation against U.S. assets “will be met with even greater force.”
Separately, the Fed kept interest rates unchanged last week at 4.25% to 4.50%, in line with expectations. Policymakers signaled that the central bank is still factoring two interest rate cuts this year, which would be bullish for gold, which becomes a more attractive alternate investment when rates drop. But most investors tracked by the CME FedWatch Tool expect the Fed to begin interest rate cuts in September, not at policymakers’ next meeting in July.
The Fed reduced rates three times in 2024 but has held them steady this year. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year.
In upcoming economic news, the Fed’s favorite inflation measure, the personal consumption expenditures price index, is due out Friday with May data. Investors will also be watching the release of consumer confidence data for June on Tuesday, new home sales for June on Wednesday and weekly initial jobless claims and May durable goods orders on Thursday. The second revision of first-quarter GDP data is also due out Thursday.
Front-month silver futures fell 1 cent last week to settle at $36.35 an ounce on Comex, as the most-active contract rolled to September from July. The September contract declined 2.4% Friday. Silver added 0.6% in May after dropping 5.2% in April and advancing 9.9% in March. It gained 21% in 2024. The September contract is currently up $0.050 (+0.14%) an ounce to $36.395 and the DG spot price is $36.20.
Spot palladium gained 1.6% last week to $1,058.00 an ounce, though it fell 50 cents Friday. Palladium advanced 2.8% last month after falling 4.9% in April and rising 7.3% in March. Palladium dropped 17% last year. The current DG spot price is up $25.60 an ounce to $1082.50.
Spot platinum rose 3.4% last week to $1,274.30 an ounce and dropped 4% Friday. It surged 8.6% in May after retreating 3.1% in April and increasing 6.7% in March. Platinum lost 8.4% in 2024. The DG spot price is currently up $24.70 an ounce to $1299.20.
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