ING analysts Warren Patterson and Ewa Manthey say gold and silver sold off as tensions in the Middle East depressed oil and reinforced concerns about persistent inflation and a tightening policy path from the Federal Reserve. They note that gold remains sensitive at around $4,000 an ounce, with upcoming U.S. CPI data and testimony from Fed Chairman Kevin Warsh seen as key factors influencing the direction of the precious metals.
Precious metals under political pressure
“Gold fell sharply on Monday and silver also came under pressure as renewed tensions in the Middle East sent oil prices higher. This reinforces concerns that inflation could remain elevated and keep the Federal Reserve on a tighter policy path.”
“Higher U.S. yields and a stronger dollar continue to negatively impact precious metals.”
“Gold remains sensitive around the $4,000 per ounce level, and the market is closely watching developments around the Strait of Hormuz and their impact on energy prices, inflation and interest rates.”
“Attention now turns to US inflation data and Fed Chairman Kevin Warsh’s testimony before Congress this week. A stronger CPI print or a hawkish Fed statement would increase pressure on gold and silver, while any signs of easing inflation risks or that the Fed is less willing to tighten monetary policy further could help stabilize prices after the recent sell-off.”
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