Gold and Silver Fall for Week, Market 'Over Pricing' Fed Rate Hikes

GOLD and SILVER PRICES retreated on Friday, both heading for a weekly loss as global stock markets rose again and crude oil slipped after US President Trump said Washington is resuming peace talks with Iran but the previous cease fire "is OVER!"

With the MSCI World Index rising within 0.3% of start-June's all-time closing high, Western government bond prices rose alongside equity prices, edging longer-term interest rates further below Wednesday's jump to multi-week highs on Trump declaring that his MOU with Tehran was dead.

Gold prices fixed around $4100 per troy ounce at London's 3pm market-clearing auction, down 1.5% from last Friday, when the precious metal showed its first weekly rise in five.

Silver had earlier fixed around $59.35 per troy ounce at 12 noon, giving back 3/4 of last week's 6.6% rebound, the first rise since early May.

"We expect gold to enter a period of consolidation over the summer," says specialist consultancy Metals Focus in its latest weekly analysis, "[but] we expect the rally to resume [because] the Fed is more likely to keep policy rates unchanged for the remainder of 2026" than raise the cost of borrowing as financial markets now predict.

Betting on end-2026 US monetary today put only a 1-in-5 chance on the Federal Reserve leaving its key overnight interest rate unchanged by Christmas.

Data from derivatives exchange the CME says the market was near-unanimous in expecting rate cuts prior to the start of the US-Israeli war on Iran.

"Although inflation is unlikely to disappear quickly," says Metals Focus, suggesting that financial markets have over-priced the odds of a Fed rate rise, "we believe policymakers will be willing to tolerate above-target inflation in order to avoid a material [economic] slowdown.

"The factors that supported gold throughout 2025 are likely to remain in place for some time."

The giant GLD gold-backed ETF yesterday grew 0.3% in size, putting it on track for the first weekly inflow of investment cash since mid-June.

Data published this week by sovereign central banks meantime showed strong gold demand in June from 4 of the largest recent buyers, with China and Uzbekistan now both adding around 40 tonnes so far this year while the Czech Republic bought for the 40th month running and Poland added around 19 tonnes last month alone.

"Lower gold prices, continued US policy uncertainty and elevated geopolitical risks have encouraged many regular official sector buyers to continue adding to their gold holdings," says Metals Focus.

Also bullish gold, "US policy uncertainty should persist," the consultancy says, while "concerns over the long-term outlook for the US Dollar are also unlikely to fade.

"Geopolitical risks should remain elevated, particularly given the precedent set by recent US unilateral actions and Iran’s recognition of the strategic leverage offered by the Strait of Hormuz."

Crude oil reversed an earlier gain on Friday following Trump's remarks about Iran. But the continued closure of the Strait of Hormuz to free-flowing tanker traffic following last weekend's resumption of airstrikes saw September contracts for Brent rise 4.9% for the week, the sharpest jump since mid-May's oil spike on Hormuz's extended closure.