Gold Snaps Iran War Downtrend as Oil and Real Rates Jump

GOLD and SILVER leapt to 2-week highs in London trading on Wednesday, surging despite a fresh jump in crude oil prices and multi-decade highs in long-term real interest rates, extending the precious metals' break with the pattern seen during the worsening US-Iran war so far.

"From this point forward," tweeted President Trump as US forces attacked Iran for the 11th day running, "any time the Islamic Republic of Iran shoots at a ship in the Strait of Hormuz...the United States will bomb and destroy ONE BRIDGE OR POWER PLANT, including those located next to, or in, the Capital City of Tehran."

Brent crude futures for September settlement peaked above $95 per barrel, highest since the start of June.

Long-term borrowing costs rose worldwide in the bond market, with the yield on 30-year inflation-protected US Treasury debt hitting the highest real rate of interest in almost a quarter-century at 2.94% per annum.

But rather than retreating as inflation fears drove returns to cash holdings higher, gold prices touched $4160 per troy ounce as New York opened for business, rallying by 5.2% from end-June's 8-month low.

More industrially-useful silver has meantime rallied 10.0% from last week's 8-month low, trading up to 7-session highs today above $60 per troy ounce.

Having held gold's price "floor" last week, Wednesday's jump in gold broke above the downtrend linking the precious metal's falling price-chart highs since the Iran war began.

Day-to-day, London gold bullion has now gone in the same direction as the price of crude oil for 5 sessions running, the longest such stretch since the US and Israel attacked Iran on the last day of February.

Last time the real rate of interest offered by US Treasury TIPS was this high, back in July 2002, London gold was trading at $320 per troy ounce.

Today's gold price in China, the precious metal's No.1 mining and consumer nation, fixed at 2-week highs, gaining 1.0% for the day near ¥898 per gram but lagging the rise in Dollar prices for London bullion.

That flipped yesterday's $15 per ounce premium to an $8 discount, suggesting weaker demand versus supply and deterring new gold imports out of London into Shanghai.

China's CSI300 stock index meantime fell 0.5%, putting it dead-flat for 2026 to date, while Korea's tech-heavy Kospi index rallied a little further from Monday's near-3-month low.

Oil and gas shares led European bourses higher, with the STOXX energy index gaining 1.3% as the broader EuroStoxx600 rose 0.6% to its highest in 2 weeks.

While imports of Russian crude to India leapt by more than 1/3rd to a new all-time record in June, Russia's exports to its No.2 buyer China have continued to plunge in July, analysis of seaborne traffic by analysts at S&P Global says.

Ukraine's intensive drone attacks have hardened the Kremlin's position on any possible peace deal, Bloomberg reports, quoting un-named sources saying that Moscow is no longer open to "ceding" any territory to Kyiv and aiming to capture the whole Donbas region by year's end.

Crude oil exports from global 'swing' producer Saudi Arabia fell to a record low in May, new data said Wednesday, rallying over the past 7 weeks thanks to re-routing shipments away from Hormuz and through the Red Sea according to trade data analysts Blooming.

"Anything that restricts shipping through the Red Sea would be problematic," said US Secretary of State Marco Rubio today, travelling to meet the Kremlin's Sergei Lavrov and saying that Iran "is in the middle of" Yemen's Houthi rebel blockade of the Bab el-Mandeb Strait to Saudi-linked traffic.