Gold's Slide Is About the Dollar, Not the Iran Deal

Gold and silver are falling hard, and the rush to blame the Iran peace deal misses the point. The metals are dropping because the two forces that have driven the market all year are pushing together again: a hawkish Federal Reserve and a strengthening dollar, according to Przemyslaw K. Radomski, a precious metals analyst at GoldPriceForecast.com.

The dollar closed last week above 100 for the first time in over a year and is firm again today. The market now prices a rate hike by year-end at close to 90%, up from roughly 57% a week ago. Deutsche Bank and Bank of America both expect the move as early as September. The Fed’s preferred inflation gauge, due Thursday, is expected to climb to 4.1% from 3.8%.

“Higher inflation keeps the Fed leaning toward a hike, a hawkish Fed lifts the dollar, and a firm dollar presses gold,” Radomski said. “The war is gone and that machinery is still running, because the war was never the thing turning it.” Gold fell about 20% during the shooting war itself. The peace deal has not changed the inflation or labor market data that drive the rate channel.

The sell-off is compounded by a second straight day of heavy risk-off action in equities. The AI trade is cracking; chip stocks are down after a guidance miss from a sector bellwether. Radomski pointed to the SpaceX listing, which he called the largest in history two weeks ago, now down for three straight sessions and below its first-day opening price after giving back more than $600 billion in value. When the most speculative trade unwinds, investors sell what they can to raise cash. Silver, the higher-beta metal, is down several times more than gold. The mining stocks are down more still.

“In that kind of move, gold and silver are not a refuge. They are a source of liquidity,” Radomski said.

The Iran story remains genuinely unsettled. Negotiators agreed on a road map; Iran invited inspectors back. Yet Iran also declared the Strait closed over the weekend before walking it back, and the president said the country will never give up enrichment. The nuclear talks in Switzerland were postponed; fighting in Lebanon has not stopped. Radomski argued that none of that helps gold. A clean peace is already priced and never propped up the metal directly. If the peace holds, the premium drains. If the unsettled pieces break, oil spikes, feeding the inflation pressure that has already done the damage. “The surprises from here run bearish for the metals whichever way they fall,” he said.

Oil kept flowing through the week, with Iran shipping over 30 million barrels under a new license. The metals kept dropping. A week this messy would have put a bid under gold if the conflict were the thing that mattered.

The dollar’s breakout above 100 is confirmed, with little resistance ahead until much higher levels, Radomski said. The broad bottoming pattern suggests a sizable rally ahead. That is bearish for precious metals, commodities generally, and stocks.

The inflation print on Thursday will be the next test. A hot number would reinforce the rate-hike case and push the dollar higher, pressuring gold again.