On Thursday, June 4th, during Asian and European trading hours, spot gold staged a rebound. Federal Reserve Vice Chair John Williams maintained a dovish stance, with his optimistic long-term inflation outlook dampening expectations for interest rate hikes. Concurrently, former President Trump told White House reporters that negotiations with Iran were progressing well, and an agreement could potentially be reached this weekend.
Trump stated, "I hear the negotiation itself is going very well, actually quite well... If a deal is indeed possible, it might be revealed this weekend."
When asked whether the US-Iran ceasefire agreement remained in effect following Iran's latest attack on Kuwait, Trump remarked, "There's a reason for everything," noting that US forces had conducted "quite a heavy strike" against Iran two nights prior. "So, some things happen for a reason, and that reason usually makes some sense."
He also downplayed Iran's recent actions as "not a big deal," adding, "We have the situation under control and quickly nipped it in the bud."
However, the congressional resolution of opposition lacks the legal power to withdraw troops; it can only subsequently pressure the White House through public opinion, party finances, and military funding approvals.
Trump's Eagerness to Showcase Domestic Results
Trump is eager to demonstrate results domestically, not because there are actual achievements on the ground, but because he is waging a war of perception.
Previously, Iran launched nighttime attacks using drones and missiles on Terminal 1 of Kuwait International Airport, causing casualties and significant damage to airport infrastructure. Kuwait urgently suspended civil aviation, activated full-scale emergency response measures, and diverted all flights to alternate airports.
US forces promptly intervened, intercepting Iranian missiles and drones headed towards Kuwait and Bahrain, and retaliated with airstrikes on an Iranian military command post on Qeshm Island in the Strait of Hormuz.
Frequent claims of an imminent "comprehensive agreement," even hinting that "an agreement could be signed this weekend," are not based on actual progress on the battlefield.
From a first-principles perspective, the US cannot completely defeat Iran, which possesses strategic depth, nor can it accept a "half-baked" compromise agreement.
The true path to a resolution necessarily involves "limiting military strikes, maintaining the Gulf blockade, and achieving long-term, gradual attrition through sanctions."
Trump's talk of "seeing results this weekend" essentially involves borrowing against future peace expectations. This serves both to hedge against domestic anxiety over the conflict's expansion and to placate voters, while also preemptively shifting the political blame for potential future negotiation failures onto Tehran.
This strategic overpromising exposes the political vulnerability of Trump's comical reliance on defining victory based on the opponent's actions.
Williams: No Clear Direction for Future Interest Rates, Not Overly Concerned About Persistent Inflation
New York Federal Reserve President John Williams stated that US monetary policy is currently in an appropriate position, with no clear direction for the future path of interest rates. "Monetary policy is in exactly the right place right now, and I see no need for either a rate hike or a cut," Williams said in an interview on Wednesday. "I also don't see a clear direction we're heading in the future."
Federal Reserve policymakers are scheduled to meet in Washington from June 16th to 17th.
Under the leadership of new Chair Kevin Warsh, they are expected to discuss whether to revise the wording of the post-meeting statement.
Many officials hope to remove language from the statement that suggests the next policy move could still be a rate cut. Williams noted that inflation remains elevated, with energy prices, tariffs, and AI-related investments contributing to upward price pressures. However, he also indicated that service inflation has shown "a considerable degree" of moderation.
Washington Infighting: Four 'Defectors' Reveal Republican Rifts Over Limiting Power
Against the backdrop of the ongoing, resource-draining conflict in the Middle East, a fierce political battle has erupted in the US over the authority to use military force against Iran.
The House of Representatives recently passed a war powers resolution aimed at limiting Trump's ability to wage war against Iran, marking the first legislative attempt from Congress to constrain the president's unilateral authority to initiate hostilities.
The final vote passed narrowly with 215 in favor and 208 against. Four Republican lawmakers defected to join the Democratic camp, becoming crucial to the bill's passage. This not only broke the Republican Party's typically unified stance on the White House's Middle East policy but also exposed deep-seated, seemingly irreconcilable rifts within the party.
The four defecting lawmakers each had their own practical considerations: Thomas Massie, who lost his primary race to a Trump-endorsed opponent, stated directly that pushing the resolution was responding to public demand and urging a ceasefire.
Andy Barr, a veteran whose seat faces risk in the midterm elections, argued from a constitutional perspective, emphasizing that the US Constitution grants the power to declare war to Congress, and that Trump's initiation of hostilities without authorization constitutes a clear overreach of power.
The Cost of 'Strategic Parasitism': The Democratic Party's Political Gamble to Thwart Trump
Since the joint US-Israel surprise attack on Iran on February 28th, the entire conflict is about to enter its hundredth day this Saturday.
The White House has consistently avoided seeking the statutory authorization from Congress for the war, repeatedly downplaying the large-scale military conflict as a "short-term, small-scale operation." This approach has continued to fuel dissatisfaction in both chambers of Congress.
From the perspective of Democratic lawmakers, this war has devolved into a "political gamble" that sells out American interests.
Democrats have publicly pointed out that Trump's current "expectation of victory" is entirely illusory. If the US were to force a compromise agreement now to end the conflict, it would be seen internationally as a de facto admission of defeat.
Conversely, if the opponent holds firm and refuses to compromise, and Trump indefinitely prolongs the war without congressional authorization, the legitimacy of initiating the war would be completely undermined.
This state of "strategic parasitism," where the power to end the war is effectively handed to the adversary (Iran), is now subjecting Trump to unprecedented political backlash.
Prolonged Conflict with Iran Imposes Heavy Burden on US Finances
Data disclosed by the Pentagon in May shows that the US military has incurred cumulative costs of $29 billion in this round of conflict. However, Harvard University fiscal experts estimate the total final cost of the entire conflict could exceed one trillion dollars.
Continuously swelling military expenditures are exacerbating pressure on the US federal deficit, directly influencing the performance of global commodities and safe-haven assets.
Long-Term US-Iran Confrontation Suppresses Gold Prices
The continued blockade of the Strait of Hormuz risks uncontrolled energy inflation: As long as the US and Iran fail to reach a substantive agreement, this global energy artery cannot truly be opened. The persistent surge in oil prices would translate directly into stubborn, global high inflation.
A global "dollar shortage" for non-US countries: In a high oil price environment, non-US countries worldwide must expend massive dollar reserves to import expensive energy.
Simultaneously, high inflation forces the Federal Reserve to maintain high interest rates, putting non-US currencies under severe depreciation pressure. To protect their own currency exchange rates and pay energy bills, countries globally could plunge into a state of acute "dollar shortage" panic.
Selling US Treasuries and gold, scrambling for liquidity: In an extreme "dollar shortage" tsunami, liquidity becomes the only remedy.
To obtain precious US dollar cash, central banks and large financial institutions would be forced to frantically sell their most core, most liquid assets for cash—US Treasuries and gold. Both of these avenues would exert downward pressure on the price of gold.
Summary and Technical Analysis
In summary, in the short term, while Trump's "deal overpromising" tugs at market sentiment, as long as the Strait remains closed and the confrontation lengthens, the global economy risks being suffocated by high oil prices.
In this "liquidity shock" triggered by the energy crisis, the logic of "cash is king" will continue to suppress gold's safe-haven appeal.
From a technical perspective, although spot gold has rebounded, it is still operating within a descending channel. After touching the middle rail of the descending channel, a pullback remains highly probable. The current strategy should still involve selling on rallies and buying on dips in conjunction with favorable news.
However, if gold prices strengthen instead of falling in the near term, that would be beyond expectations, and market participants may need to search for new explanations.
As of the time of writing, spot gold is trading at $4462 per ounce.
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