Spot gold steadied near $4,020 while silver gained 2% to trade above $57, as mediation headlines offer intermittent support, though upside stayed capped as traders have fully priced in at least one Fed hike by year-end. Hawkish commentary from Chair Warsh and other officials, combined with the renewed rally in oil prices, has pushed September hike odds closer to 60%. This follows a week in which gold managed to close above $4,000 but still posted a 2.5% weekly loss, while silver recovered some ground after touching $54.7, its weakest since November 2025, before finishing the week down by 7%. A softer CPI print offered bullion a brief midweek lift, but renewed conflict escalation quickly reasserted the inflation and higher-for-longer narrative, pressuring non-yielding assets. With oil-driven inflation risk still live against a patient but watchful Fed, the outlook for precious metals stays skewed toward downside on every fresh escalation.
Oil extended gains early today, building on last week’s 15% surge, with Brent briefly exceeding $91 and WTI topping $85 as US strikes on Iranian military infrastructure continued for a ninth consecutive night, targeting surveillance, logistics, storage and maritime assets. Iran expanded retaliation across Bahrain, Jordan, Kuwait, Oman, Qatar and Syria, including attacks on a Kuwaiti power plant and oil facility, while its navy began turning back vessels on unsanctioned Hormuz routes, effectively ending earlier understandings with Washington. Prompt Brent entered its steepest backwardation since early June, signalling tight physical supply rather than headline risk alone. The advance pared after Iran’s Foreign Ministry confirmed it had received mediator proposals aimed at de-escalation, pulling Brent back below $88 and WTI below $82. With both chokepoints still live but a mediation channel now open, Brent could retest $90 on renewed escalation, though confirmed progress on talks could quickly unwind the current risk premium.