Iran Conflict Heats Up Gold and Silver
Gold prices rose more than 1% to around US$4,070 per troy ounce in trading on Tuesday (July 21). This increase occurred as investors monitored diplomatic efforts to defuse the US-Iran conflict.
The market received signals that mediators were working to bring Washington and Tehran back to the negotiating table. One option being discussed was a 10-day ceasefire to help secure shipping lanes in the Strait of Hormuz.
The US-Iran conflict had previously pushed oil prices to their highest level in more than a month. The rise in oil prices has renewed market concerns that higher energy costs could trigger renewed inflationary pressures.
These inflation concerns have led some Fed officials to assess that interest rates may need to remain high for longer, potentially even rising again if price pressures persist. Although the Fed is expected to hold rates at its meeting next week, the market now sees a chance of a September rate hike above 60%.
In addition to gold, silver prices also surged more than 4% to around US$59 per troy ounce. Silver's rally occurred as investors sought precious metals amid geopolitical uncertainty, while weighing the conflict's impact on oil, inflation, and the Fed's policy direction.
As a result, gold and silver still have the potential to move strongly as long as the Middle East conflict remains under control. However, gains could remain limited if oil prices again drive inflation and reinforce expectations of high US interest rates. The market's next focus will be on developments in US-Iran diplomacy and the Fed's policy signals. (arl)
Source: Newsmaker.id
