Teaser: Gold and silver ended both the day and week lower as volatility across the precious metals complex eased at the start of the third quarter. Despite the recent consolidation, the broader outlook for gold remains constructive, with slowing economic growth, potential monetary policy easing, renewed geopolitical tensions and bargain buying expected to support another leg higher later this year. Meanwhile, the latest escalation in the U.S.-Iran conflict has increased uncertainty over global oil supplies, challenging expectations of a sizeable supply surplus next year. Firm crude oil prices could also sustain inflationary pressures, potentially delaying the pace of interest rate cuts by major central banks. Higher energy costs may keep inflation expectations elevated, limiting policymakers' flexibility and supporting demand for safe-haven assets if macroeconomic risks intensify. However, resilient economic data and persistently high interest rates may continue to cap upside in the near term. 

Introduction:  

Gold and silver weakened during the week as renewed US-Iran tensions lifted crude prices, reviving inflation concerns and reinforcing expectations that the Federal Reserve may keep interest rates elevated for longer. Higher Treasury yields and a firmer dollar reduced demand for non-yielding assets despite intermittent safe-haven buying. Markets also monitored mixed signals from Fed officials alongside uncertainty surrounding the fragile Middle East ceasefire, limiting stronger upside momentum across bullion. Going into the coming week, precious metals are expected to remain driven by geopolitical developments, US inflation data and Fed communication, with volatility likely to remain elevated across global markets. 

WTI crude futures posted weekly gains as renewed military exchanges between the US and Iran revived concerns over potential supply disruptions across the Middle East. Fresh US strikes on Iranian infrastructure, retaliatory attacks on US-linked assets, and continued uncertainty surrounding the Strait of Hormuz restored part of the geopolitical risk premium that had faded in previous weeks. Although fears of weaker global demand and higher inflation limited stronger gains, supply risks remained the dominant driver of price action. Traders also monitored OPEC+ production trends and regional shipping activity as the market balanced tighter supply risks against broader macroeconomic uncertainty. Going forward, crude is expected to remain highly headline-driven, with developments surrounding Hormuz, US-Iran relations, and upcoming US inflation data likely to determine whether prices extend higher or retrace recent gains. 

Gold slipped below $4,100 an ounce on Monday, remaining under pressure as renewed missile strikes between the US and Iran drove oil prices higher, fuelling expectations of interest-rate hikes to curb inflation. The US carried out its fourth strike in a week against Iran on Sunday in retaliation for an Iranian attack on a Cyprus-flagged container ship. Tehran declared that the Strait of Hormuz would be closed "until further notice," though the claim was dismissed by the US Central Command. Investors are also awaiting key US inflation data due this week for further clues on the Federal Reserve's policy outlook. Markets currently expect the Fed to deliver one more interest-rate hike before the end of the year. Meanwhile, Fed Chair Kevin Warsh is scheduled to make his first appearance before the US Congress on Tuesday.