Geopolitical tensions have resurfaced, with spot gold experiencing a volatile overnight session, rising before falling back to close down over 1%. COMEX gold futures declined by 1.22%, while SHFE gold edged up by 0.08%. The situation in the Strait of Hormuz escalated after a fully loaded Qatari LNG carrier was attacked and caught fire, adding fresh uncertainty to US-Iran relations. This event triggered a sharp intraday rally in crude oil prices, rekindling inflation expectations. Concurrently, a rising US dollar index applied short-term pressure on gold.
Key Developments from the Overnight Session
The most prominent developments overnight were geopolitical. A US official stated that Iran had recently fired upon three commercial vessels in the Strait of Hormuz, a move deemed "completely unacceptable." In response, the US Treasury revoked exemptions for Iranian oil sales, and the US military announced it had commenced "strong strikes" against Iran. The resurgence of conflict in the Middle East prompted the market to trade on short-term inflation and interest rate dynamics, which once again weighed on gold. The market's focus now shifts to the subsequent evolution of these geopolitical events. On the demand side, China's gold reserves at the end of June stood at 75.44 million ounces, an increase of 480,000 ounces (approximately 14.93 tonnes) from the previous month. This follows May's reported reserves of 74.96 million ounces, marking the 20th consecutive month of increased gold holdings and the highest level since October 2023. Recent gold price action has shown a pattern of consolidating within a range with a slightly bullish bias near the bottom. However, the strength of any rebound has been weak, indicating that significant divergence between bullish and bearish views persists, caught between the crosscurrents of geopolitical factors and the uncertain path of Federal Reserve policy.
Comments