“Investors are cautiously optimistic, but the structural risks to global supply chains remain,” said a commodity strategist at Saxo Bank. “This supports interest in metals like gold and silver that traditionally hedge uncertainty.”
Rising Tensions in Ukraine Add Tailwinds to Gold
Heightened geopolitical risk is also lending support. Reports of approximately 500 drone and missile strikes by Russia in Ukraine over the past 72 hours have kept market sentiment defensive, with traders reluctant to exit safe-haven positions despite broader equity strength.
At the same time, the U.S. Dollar Index (DXY) trades near 99.00, pressured by a combination of concerns about the fiscal deficit and expectations of future policy easing by the Federal Reserve.
Rate Cut Bets Persist Despite Strong Jobs Data
Although the May Nonfarm Payrolls report surprised to the upside with 139,000 new jobs, the broader market is still leaning dovish. According to the CME FedWatch Tool, there’s a 60% probability of a rate cut by September.
Gold, which yields no interest, typically performs well when real yields fall or when inflation expectations rise.
Focus Shifts to US Inflation Data This Week
Traders now await the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) reports, due on Wednesday and Thursday, respectively. Any surprise in inflation trajectory could reshape the Fed’s policy outlook—and by extension, the near-term trajectory for gold and silver.
