Spot gold and silver both declined at the start of the week as markets focused more on the risk of the Federal Reserve maintaining a tighter monetary policy stance, rather than safe-haven demand linked to U.S.-Iran tensions.

At the time of writing, spot gold was trading near $4,015.60 per ounce, down 1.79%. Meanwhile, spot silver traded around $58.18 per ounce, down 1.48% on the session.

Precious Metals Pressured by Higher Yields and Oil Prices

Although tensions in the Middle East have not fully eased, gold and silver failed to receive strong support from their safe-haven role. The main reason was the rise in oil prices and U.S. Treasury yields, which increased concerns about inflation and the possibility that the Fed may have to maintain a hawkish stance for longer.

The 10-year U.S. Treasury yield rose to around 4.377%, while the 2-year yield remained above 4.10%. When yields rise, the appeal of gold and silver often weakens because these assets do not generate fixed income.

U.S. Stocks Rebound as Risk Sentiment Improves

U.S. equities recovered as the initial shock from the Middle East began to fade. The Nasdaq Composite gained 2.1%, while the Dow Jones closed above 52,000 points, setting a new record high.

Risk appetite was supported by expectations that the U.S. and Iran could resume negotiations, while shipping activity through the Strait of Hormuz continues, although at a lower-than-normal level.

As a result, gold and silver were not priced purely as safe-haven assets. Instead, they were more heavily influenced by interest rate expectations.

The Fed Remains the Key Driver

After its meeting on June 17, the FOMC kept the target range for interest rates unchanged at 3.50% - 3.75%, with a unanimous 12-0 vote. However, the latest projections suggest that the Fed may keep rates higher for longer.

The median federal funds rate forecast for 2026 was raised to 3.8%, up from 3.4% in March. At the same time, the 2026 PCE inflation forecast was lifted to 3.6%, from 2.7% previously.

These revisions encouraged markets to continue repricing monetary policy expectations, creating pressure on precious metals.

Strait of Hormuz Risk Remains, but It Is Not a Full Closure

The situation in the Strait of Hormuz is best described as a reduction in shipping capacity, not a full closure. Traffic fell to 22 transits on Sunday, the lowest level since the U.S. and Iran reached a preliminary agreement aimed at ending the conflict.

However, incidents involving cargo ships and oil tankers continue to make the region a major risk point for energy markets.

WTI crude oil rose 2.2% to around $70.75 per barrel, while Brent crude climbed 1.6% to around $73.15 per barrel. Higher oil prices continue to add to inflationary pressure, reinforcing the case for the Fed to keep policy tight.

Technical Outlook for Gold and Silver

For spot gold, the nearest resistance zone to watch is around $4,100 - $4,170.85 per ounce. If price breaks above this area, the next upside targets could be $4,382.62 and $4,452.75.

On the downside, the key support level is around $3,959.08. If price breaks below this zone, selling pressure could extend toward $3,900 and then $3,886.46.

For spot silver, the nearest resistance zone stands around $59.58 - $61.51. If silver moves above this area, the next upside targets could be $62.38 and $65.97.

Conversely, if silver breaks below support at $55.70, the next downside levels to watch would be $54.49 and $54.23.

Conclusion

Gold and silver are under pressure as markets prioritize the interest rate narrative over safe-haven demand. U.S.-Iran tensions remain a risk factor, but the impact of rising oil prices and elevated Treasury yields is causing precious metals to trade more like Fed-sensitive assets.

In the short term, the direction of gold and silver will depend heavily on U.S. yields, oil prices, economic data, and the next signals from the Federal Reserve.

Source: Kitco