Australia RBA Bullock Speech

New Zealand Building Permits MoM

Japan Unemployment Rate

Japan Jobs/applications ratio

Silver prices collapsed over 6% toward $88 on Monday, paring a 3% morning rally as a massive "risk-off" rotation and a surging US dollar overran earlier safe-haven buying. While the initial strikes on Iran triggered a spike to 96.40 dollars, the market’s focus shifted to the economic fallout of the Strait of Hormuz closure, which threatens 20% of global energy flows and risks a deep industrial slowdown. This threat to energy-intensive manufacturing has dampened the demand outlook for silver in the solar and electronics sectors, causing it to underperform gold's relative stability. Pressure intensified as the ISM Manufacturing Prices Index leaped to 70.5, a 11.5 point jump that signaled reignited inflation and slashed the probability of Fed rate cuts. With the US dollar hitting a five-week high and 10-year Treasury yields climbing, the opportunity cost of holding silver has soared, while liquidations by leveraged futures traders to cover broader stock market losses added pressure.

Silver Tumbles on Renewed Risk Appetite

The yield on the 10-year US Treasury note soared over 10bps to 4.05% on Monday, erasing the bond rally from last week as higher inflation risks supported an outlook of restrictive interest rates from the Federal Reserve, offsetting the impact of low risk appetite. The US attacked Iranian targets and killed their supreme leader, prompting Iran to strike a series of civilian targets and energy infrastructure over the weekend while driving shipping companies to suspend trade through the Persian Gulf. The events triggered a surge in energy commodities, raising concerns that inflation could rise and force the Fed to keep rates elevated for a longer time. The concerns were magnified after the ISM prices gauge for manufacturers unexpectedly surged to a three-year high, while strong orders limited the argument for doves in the FOMC. Markets continue to expect a rate cut in the Fed's July meeting, although rate traders increased their positions for a September cut in the session.

US 10-Year Yield Surges 10bps

Gold held above $5,300 on Monday, paring earlier gains after spiking past 5,419 dollars as a dramatic "buy the dip" rally in US stocks drained the metal's safe-haven momentum. While the initial strikes on Iran triggered a flight to safety, the S&P 500 staged a massive midday comeback, turning positive as investors bet that the conflict would not escalate into a full closure of the Strait of Hormuz. Crude oil also eased from its session highs, cooling the immediate inflation fears that had driven gold's run. Strength in tech giants like Nvidia and Microsoft further signaled a return to riskier assets, while a jump in the ISM Manufacturing price index to 70.5 pushed bets for later in the year rate cuts, reinforcing the dollar's appeal. At the same time, surging Treasury yields capped bullion’s appeal further.

Gold Pares Gains

The Italian FTSE MIB fell 2% to close at 46,280 on Monday, as rising tensions in the Middle East triggered a broad risk-off move across financial markets. In addition, Italy's budget deficit last year failed to fall inside the European Union's ceiling as targeted by the government, casting a shadow over Rome's hopes of an early exit from an EU disciplinary procedure. Financial stocks underperformed, with UniCredit down 3% and Intesa Sanpaolo losing 3.9% as the combination of poor fiscal data with higher inflation expectations from soaring gas prices drove BTP yields to surge. In contrast, energy-related stocks were lifted as the disruption of oil exports in the Persian Gulf triggered a surge in energy prices, with Eni surging 3.6%. Also, Leonardo climbed 2.5% on the rising geopolitical tensions.

Trending Symbols And Events

Most latest news, events and ideas for smart decisions

Latest News