Gold and Silver Rally as Oil-Driven Inflation Fears Return

Spot gold rose 0.4% to $4,358.71 per ounce, while silver futures surged 2.80% to $65.106. This uptick defied the typical pressure exerted by a stronger U.S. dollar and climbing bond yields. The 30-year Treasury yield rose 5 basis points to 5.244%, hovering just below its recent July high, as the implied probability of a September rate hike rebounded to 51.7% from a low of 44.4% seen after Friday’s payroll report.

Geopolitical tension at the Strait of Hormuz remains the primary catalyst for the current inflation hedge. Tehran’s insistence on compensation for U.S. strikes has dimmed prospects for a quick normalization of tanker traffic, pushing Nymex WTI crude toward $79.00 and Brent toward $85.00. While North American equity indices, including the S&P 500 and the Dow Jones, retreated slightly from record highs, precious metals have maintained their bid.

Market participants are now bracing for a barrage of economic data. The trajectory of inflation expectations hinges on the July CPI release scheduled for Wednesday, followed by PPI figures on Thursday and retail sales data on Friday. From a technical perspective, gold bulls are focused on clearing the $4,360 to $4,380 resistance zone to sustain momentum, while bears watch for a breakdown below the $4,299 support level.