Gold Climbs Above $4500 as Markets Reassess Rate Hike Outlook
On July 12, gold futures for December delivery on the New York COMEX surged to $4502.70 per ounce, the highest level since mid-June. Spot gold rose as much as 1.6%, hitting $4438.20 intraday before settling around $4422.34, marking a 1.2% increase from the previous session. This upward momentum continues a near two-month rally in precious metals, supported notably by persistent central bank purchases from countries including China.
Silver futures for September delivery also advanced to $66.98 per ounce, reaching a peak not seen since June, with spot prices steady near $65.54—a 0.9% rise. Despite recent gains, silver remains about 8% lower year-to-date, pressured by market corrections and geopolitical tensions. Platinum and palladium prices climbed 0.9% and 0.3%, trading at $1771.30 and $1374 respectively.
US Inflation Data Temper Rate Hike Expectations, Impacting Short-Term Yields
July’s US Consumer Price Index (CPI) showed a modest 0.1% monthly increase and a 3.4% year-on-year rise, largely in line with market forecasts. The core CPI, excluding food and energy, grew 0.2% month-over-month and 2.5% annually—the slowest pace since March 2021. Additionally, July’s nonfarm payrolls contracted by 23,000 jobs, signaling a cooling economy. These moderate inflation figures have alleviated immediate pressure on the Federal Reserve to accelerate interest rate increases.
Futures markets now price around a 40% chance of a rate hike in September, down from earlier estimates. The probability of an October hike has dropped from 75% to approximately 60%, with some investors pushing expectations for tightening to December. The two-year US Treasury yield fell modestly by 3 basis points to 4.18%, while the dollar index remained largely steady. Gold’s sensitivity to real interest rates—given it does not yield income—continues to drive pricing dynamics.
Ole Hansen, Head of Commodities Strategy at Saxo Bank, noted that gold has found solid support near $4200, with resistance clustered just below the 200-day moving average around $4500. While December futures have broken above this threshold, spot prices still lag by roughly $80.
Oil Markets Show Divergent Trends Amid Regional Geopolitical Developments
While precious metals rose, oil markets showed volatility. US West Texas Intermediate (WTI) crude revolved near $83 per barrel, and Brent crude maintained weekly gains. The ongoing closure of the Strait of Hormuz remains a key geopolitical driver for oil price fluctuations. Pakistan’s Defense Minister on July 12 commented that Washington and Tehran are nearing an accord to reopen this strategic waterway, though both sides publicly maintain firm stances. Seema Shah, Global Chief Strategist at Principal Asset Management, highlighted that the Strait’s continued disruption sustains upward inflationary pressures in the near term.
Precious Metals Mining Stocks Outperform Amid Renewed Investor Interest
Since late July, gold and silver prices have surged roughly 9% and 13%, respectively. Mining equities have outpaced these gains considerably, with some individual stocks rallying far beyond the metals themselves. Eldorado Gold climbed 33% in the past month, while Agnico Eagle, Kirkland Lake Gold, and Newmont Mining each posted double-digit percentage increases. Other notable performers included Wheaton Precious Metals (+24%), Pan American Silver (+22%), Kinross Gold (+19%), and Royal Gold (+18%). Barrick Gold rose 11% during the period, with its shares reacting to a $1.95 billion settlement with Newmont over the Four Mile project.
The SPDR Gold Trust, the world’s largest gold ETF, recorded a monthly return near 9%. This synchronized rise in precious metals and mining stocks reflects market sensitivity to evolving monetary policy cues, inflation trends, and geopolitical uncertainties, particularly regarding the Federal Reserve’s rate decisions and Middle East tensions.