Gold & Silver Under Pressure, Trump-Iran Reignites “High Interest Rate” Narrative
Gold and silver extended their decline on Tuesday (June 9) after Middle East tensions escalated and markets assessed the risk that energy supply tightening could persist for longer. Sentiment shifted when US President Donald Trump stated that the US “must respond” after accusing Iran of shooting down a US military helicopter off Oman, adding a new threat to a peace process that had been described as “almost done.”
This rise in geopolitical risk has revived the transmission path that has recently been most pressuring precious metals: tight energy → higher inflation → higher interest rates. In that scenario, central banks tend to keep interest rates high for longer or even raise them, which weighs on gold and silver as they provide no yield.
Technically, gold also suffered after breaking through its 200-day moving average, a level often watched by institutional investors and which could trigger further selling. Gold is now said to be around 19% below its pre-war level in late February, confirming that the market still sees “rate-driven” pressures as more dominant than its safe-haven function.
Citigroup also cut its 3-month gold target to US$4,000/oz from US$4,300/oz, citing the increasing likelihood of a Fed rate hike this year, although it maintained its 6-12-month target of US$5,000/oz. This means the long-term outlook remains constructive, but the short-term room for maneuver is considered high risk.
At the close in New York, spot gold fell 1.5% to US$4,263.43/oz, while silver fell 4.4%. The Bloomberg Dollar Index did weaken slightly, but not enough to withstand pressure from a combination of geopolitical headlines, energy inflation expectations, and interest rate repricing. (arl)*
Source: Newsmaker.id
