Everbright Futures 0713 Gold Review: Middle East tensions suppress gold; this week focus on Waller's first congressional appearance and CPI data
Over the weekend, tensions escalated in the Strait of Hormuz, and spot gold prices in London came under pressure in early trading on Monday. Looking back at last week, gold prices at home and abroad fluctuated more intensely, and the weekly trend continued to weaken. Spot gold fell 1.51% for the week, and the main Shanghai gold contract declined by 1.48%. On the geopolitical front, a new round of conflict has erupted between the United States and Iran. As both sides have intensified their actions, navigational risks in the Strait of Hormuz have risen again, pushing up oil prices and inflation expectations, leading to short-term gold price fluctuations and weakness.
From a macro perspective, the US ISM Services PMI for June fell from 54.5 to 54.0, slightly below the market expectation of 54.2. This data has stayed above the 50 threshold for prosperity and decline for consecutive months, indicating that the service sector remains in expansion territory, although the pace of growth has slowed. However, the employment index posted its largest increase since 2024 and returned to expansion, while the prices paid index fell to 67.7, the lowest in four months, signaling a slowdown in rising business costs. Minutes from the Federal Reserve's June FOMC meeting show that more officials believe the AI investment boom may become a key driver of persistent inflation, with Middle East conflicts and tariff policies as two other major inflation risks. If inflation remains high this year, further rate hikes may be necessary; if price pressures ease quickly, the Fed can remain on hold. Divergence within the Fed over communication of monetary policy is surfacing: Governor Waller stated that forward guidance remains a valuable tool, in contrast with Chair Powell’s stance. Powell will testify before the Senate Banking Committee on July 15 to discuss the Fed’s semiannual monetary policy report to Congress, which may provide some guidance on interest rates and future policy direction.
The precious metals market is set for a dual test as "Powell's first congressional hearing and the CPI data release" take place. On July 14, the US June CPI and Powell's House hearing will occur on the same day. After the July 15 PPI release, Powell will testify before the Senate again. The resonance between inflation data and policy signals is expected to impact precious metal prices. The second round of US-Iran conflict saw the market briefly return to trading on rising inflation and rate expectations, but judging by the week’s movements in oil and gold prices, the market is not optimistic about the sustainability of this conflict. There has not been enough bullish momentum to trigger a large gold rebound, and the overall trend remains weak with some recovery, which also reflects that gold’s trading in the bottom consolidation range is not stable. Under the repeated interplay between geopolitics and Federal Reserve policy, divergence between bulls and bears is significant, and caution is still warranted.
Author: Li Qi
Professional Qualification: F3046227
Trading Advisory Qualification: Z0016145
Editor: Zhu Henan
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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