- Spot gold prices on Tuesday maintained a narrow fluctuation above $4,311 per ounce, after surging over 2% the previous trading day and reaching a high not seen in over a week. Market participants are currently weighing the preliminary geopolitical agreement signed between the US and Iran and the upcoming Federal Reserve policy decision.
- The preliminary US-Iran agreement plans to reopen the previously obstructed Strait of Hormuz and extend the ceasefire period by 60 days to advance nuclear program negotiations. This move has somewhat eased tensions in the Middle East, suppressing the short-term risk premium on gold prices.
- Citigroup has significantly raised its gold price target for the next three months by $500 to $4,500 per ounce, while Singapore announced plans to establish an over-the-counter gold clearing system and launch central bank gold custody services, aiming to establish its position as a global gold trading hub.
US-Iran Preliminary Ceasefire Agreement Eases Geopolitical Risk Sentiment
US President Trump stated that the US and Iran have signed a preliminary agreement aimed at ending the conflict in the Gulf region. Although specific details have not been fully disclosed to the market, it is known that the agreement will reopen the Strait of Hormuz, crucial for global energy and commodity transportation. Additionally, the ceasefire period will be extended by 60 days, allowing time for diplomats from both countries to address core disputes, including Iran's nuclear program. The temporary easing of geopolitical risks led to spot gold entering a high-level consolidation after a significant surge on Monday, while US gold futures for August delivery slightly retreated by 0.4% to $4,332.60 per ounce.
Fed Meeting Approaches as Market Awaits Warsh's Policy Guidance
The global gold market is currently highly focused on the Federal Reserve's (Fed) upcoming interest rate decision and the monetary policy press conference by Chairman Kevin Warsh on Wednesday. Wall Street macro institutions generally expect the Fed to maintain the current interest rate range. Given gold's nature as a non-yielding asset, if the Fed's statement signals a more hawkish adjustment than the market anticipates, international gold prices may face short-term valuation pressure; conversely, if the policy stance leans towards dovishness, gold prices could gain further upward momentum.
Institutional Bullish Sentiment Remains Despite Divergence in Physical Demand
Despite a cooling in risk aversion sentiment, large financial institutions remain optimistic about the long-term trend of gold. Citigroup (Citi) in its latest report raised its gold price forecast for the next three months by $500 to $4,500 per ounce, indicating strong recognition of gold as an inflation hedge and asset allocation tool. However, there is a divergence in the demand side for physical gold and silver. As a major global silver consumer, India's government data shows that due to tightened import control policies, India's silver imports in May plummeted 87% year-on-year, reaching a more than three-year low.
Singapore Advances Infrastructure to Seize Gold Pricing Power
In the process of reshaping the Asian precious metals market landscape, Singapore is showing strong expansion intentions. The Deputy Prime Minister of Singapore publicly announced that the country will establish a new over-the-counter gold clearing system and officially launch central bank gold custody services. This initiative aims to enhance financial infrastructure and liquidity security, positioning Singapore as a globally competitive gold trading center. With increasing demand for physical gold reserves from both official and private sectors in Asia, this move could potentially alter the traditional gold pricing mechanisms dominated by London and New York.
Precious Metals Sector Under Pressure as Spot Silver and Platinum Group Metals Decline
Due to gold's high-level stagnation and adjustments in industrial demand expectations, other precious metal commodities generally showed a downward trend on Tuesday. Spot silver prices fell by 0.4% to $69.74 per ounce, failing to continue the previous strong trend. Platinum group metals also weakened, with spot platinum down 0.4% to $1,761 per ounce, and spot palladium performing the weakest, with an intraday drop of 1.3%, reaching $1,331.59 per ounce. Analysts pointed out that if the US-Iran peace agreement progresses smoothly, the supply chain premium in the commodity market will be further compressed.
