Precious metals back in red 📉 GOLD and SILVER pressured by dollar demand 🟡

Precious metals futures entered the new week with a decisive decline, reversing most of the tentative gains from last week. GOLD is pulling back by approximately 1.1% today, while SILVER is recording a loss of around 3%. Chaos surrounding the Middle East ceasefire is once again rattling investor sentiment, boosting safe-haven demand for the US Dollar.

At the start of today’s session, gold plunged 3% to approximately $4,630 per ounce after the lead US negotiator, Vice President JD Vance, announced the collapse of negotiations with Iran. Following the breakdown, Donald Trump announced a maritime blockade of the Strait of Hormuz, effective as of 4:00 PM CET, and vowed the "immediate elimination of Iranian ships" that attempt to breach the blockade.

GOLD found support at the 100-day Exponential Moving Average (EMA100; dark purple), but resistance at the EMA30 (light purple) continues to block a real breakout from the downtrend. Source: xStation5

Failed negotiations break hopes for a return to status quo

The Iranian side accused the US of a "maximalist" stance in the negotiations, with the primary point of contention remains the issue of uranium enrichment. According to the Iranian Foreign Minister, significant progress had been made, but the US allegedly kept changing its conditions, which ultimately led to the failure of the talks.

The renewed escalation of hostilities has sent Brent crude prices soaring above $100 (currently +7.5% at $101). The market saw a brief moment of relief in reaction to a New York Post report suggesting that Iran was considering halting its nuclear program; however, the authors later clarified the report, stating it was based on Vance’s proposal rather than new developments.

Gold and silver contracts have recovered some of their early-session losses, but the fresh spike in geopolitical uncertainty has triggered a textbook flight to the dollar. The risk of a prolonged closure of the Strait of Hormuz symmetrically increases the risk of sustained price pressure, which in turn could force the Fed to take more hawkish steps. Nevertheless, keeping interest rates at relatively high levels reduces the attractiveness of commodities compared to assets like bonds, especially at current valuations.

The return of the OIL rally coincides with the return of demand for the dollar. However, the limited gains on the USDIDX today suggest significant uncertainty regarding the future of the conflict following the failed negotiations. Source: xStation5