Gold Drops 2.58% to $4486, Silver -4.40% on Geopolitical Tensions

Today's session for precious metals was marked by a pronounced downward trend, particularly visible in silver, which shed 4.40%. Gold, despite a smaller decline (-2.58%), also closed the session with significant losses, settling at $4486.90 USD/oz. This widespread weakness is primarily attributed to intensifying geopolitical tensions in the Middle East, with the Pentagon preparing deployment options in Iran and the UK authorizing the use of British bases for attacks on Iranian sites. The prospect of a wider and prolonged conflict generates uncertainty, but paradoxically, the market has reacted with sell-offs in precious metals, anticipating a tightening of monetary policies and a potential strengthening of the dollar.

Markets are betting on a Federal Reserve rate hike as early as July, reflecting concerns about inflation, fueled by fears of an energy shock stemming from the conflict in Iran. Statements from Joachim Nagel, President of the Bundesbank, warning that the ECB must act if energy costs drive inflation, reinforce this view of tighter monetary policies on both sides of the Atlantic.

Precious Metals Closing Levels

* **Gold (XAU):** $4486.90 USD/oz (-2.58%)

* **Silver (XAG):** $68.08 USD/oz (-4.40%)

* **Platinum (XPT):** $1923.60 USD/oz (-1.03%)

* **Palladium (XPD):** $1416.00 USD/oz (-2.70%)

* **Copper (HG):** $5.33 USD/oz (-2.58%)

Drivers of the Movements

The main driving force behind the declines has been **geopolitical risk** exacerbated by the escalation of the conflict with Iran. The possibility of a closure of the Strait of Hormuz, which according to the Dallas Fed could reduce global growth by 2.9% in the second quarter, adds a layer of macroeconomic concern. In this context, speculation about a Federal Reserve rate hike in July, and the European Central Bank's tightening rhetoric to control inflation, have strengthened expectations of a more robust dollar. A strong dollar tends to put downward pressure on the prices of precious metals denominated in this currency. Silver has been particularly sensitive, showing higher volatility and a more pronounced decline, which often occurs when risk appetite diminishes.

Outlook for Tomorrow

For the next session, attention will focus on the evolving geopolitical situation in the Middle East and any new statements from central banks. Investors will closely monitor macroeconomic data that could offer clues about the trajectory of inflation and monetary policy decisions. The resilience of precious metals as a safe-haven asset will be tested if tensions escalate further, although the anticipation of higher rates could limit their short-term upside potential. We will continue to closely monitor key support and resistance levels for each metal.

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