Gold and Oil Retreat as Israel-Iran 'Fight It Out'
Monday, 6/16/2025 14:58
The PRICE of GOLD fell back Monday after touching a fresh 2-month high, while crude oil also pared its jump to 4-month highs amid the worsening conflict between Israel and Iran,
writes Atsuko Whitehouse at BullionVault
Global stock markets rose despite the 4th day of air-strikes, missile and drone attacks between Israel − widely believed to have a nuclear arsenal − and Iran, which claims to be researching energy-use only but was
censured last week by the UN's IAEA for failing to report and reveal its progress.
"I hope there's going to be a deal. I think it's time for a deal," said US President Donald Trump on Sunday before departing for the Group of Seven (G7) summit in Canada on Sunday.
"[But] sometimes they have to fight it out."
The spot gold price in London fell nearly $40 per ounce by Monday lunchtime, retreating from an earlier surge to $3451 during Asian trading − less than $50 short of the all-time high set on 22nd April at
$3500 gold.
Crude oil also cut its overnight rise, with Brent falling 1.7% after having risen as much as 5.5% earlier in the day.
In contrast, global stock markets rebounded, with the pan-European Stoxx 600 reversing half of Friday's 0.9% drop while New York's S&P500 index rose at Monday's opening.
"The situation in the Middle East is not making the [gold] market shake, and it's likely it will stay that way as long as there is no major escalation," says one fund manager.
Reports over the weekend said Israeli attacks killed at least 224 people in Iran, while Iranian strikes killed 24 people across several locations in Israel.
Israel also launched an attack on Iran's giant South Pars gas field on Saturday, forcing the shutdown of a key platform in the Opec oil cartel's 3rd largest producer member.
The escalation came just as G7 leaders gathered in Canada under newly elected Prime Minister Mark Carney, ripping up his agenda focused on the global economy and financial security.
Gold prices on the Shanghai Gold Exchange today slipped 0.2% to ¥788 per gram and moved to a $3 per ounce discount compared to London, reflecting weaker domestic demand in China, the precious metal's largest gold-consuming nation.
Prior to Friday's global price jump, Chinese gold traded at a $15 premium to London last week, twice the typical historical incentive for new bullion imports to Shanghai.
China's CSI 300 index ended Monday up 0.3% after retail data beat forecasts and industrial output met analyst expectations for the world's 2nd largest economy.
Japan's Nikkei 225 climbed 1.3% as the Yen weakened ahead of Tuesday's Bank of Japan policy decision, where the central bank is expected to keep its interest rate at 0.5% while tapering bond purchases more gradually.
The US Federal Reserve's June policy meeting also begins Tuesday and concludes Wednesday.
While the Federal Open Market Committee is not expected to cut interest rates, the FOMC will release its Summary of Economic Projections, also known as the "dot plot" forecasts, outlining policy-makers' expectations for inflation, growth and the year-end federal funds interest rate.
This week also brings monetary policy decisions from Norway, the Bank of England and the Swiss National Bank on Thursday, plus the People's Bank of China on Friday.
In European currencies, gold fell 0.8% to €2950 per ounce Monday, while UK gold prices slipped 0.7% to £2514 per ounce.
Silver, in contrast, steadied at $36.32 per ounce following last week's decline − its first such drop in four − remaining close to its recent 13-year high.
Platinum rose 2.0% to $1262 per ounce, rebounding from Friday's pullback after having briefly gained 11.7% and reached $1306,
platinum's highest price since February 2021.
"The situation in the Middle East is the major issue of the day," says a strategist to Reuters.
"The message from the market is that it isn't too afraid, but it does turn what was already going to be a busy week into a frenetic one, and that has a lot of people on the sidelines."
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