Gold Dips Amid Geopolitical Jitters and Rate Hike Fears

Gold and silver prices fell in early Asian trade on Monday. Renewed US-Iran tensions have pushed oil prices higher, fueling inflation concerns and impacting precious metals. Elevated bond yields also contributed to the downward pressure, as investors can earn interest from US government securities.

On the COMEX, gold futures were down 0.91% at $4,488.60 per ounce, and silver was trading 0.83% lower at $66.44 per ounce. This followed a significant drop on Friday when US Treasury yields jumped, raising inflation worries.

The market has increased the probability of a September US rate hike to around 57%. This, combined with a stronger dollar, makes gold and silver relatively more expensive and less attractive to buyers using other currencies.

Looking ahead, medium-term outlooks for gold and silver are divided. Monarch PMS forecasts gold between $4,300-$4,700 and silver between $70-$85 by the end of 2026 in its base case. However, a bull case sees gold reaching $5,000-$5,600 and silver $95-$120, while a bear case projects gold at $3,400-$3,900 and silver at $45-$55.

Silver's outlook is further supported by a persistent physical supply-demand deficit, with mine supply remaining flat for a decade. Above-ground stocks have been drawn down, and low registered COMEX inventory relative to paper claims could amplify price movements if physical demand increases.