The ceasefire, reportedly brokered through U.S. and Qatari channels, followed missile exchanges in recent days and now appears to be holding. With no further immediate military escalation, investors rotated into risk-on assets, pulling capital away from non-yielding safe havens like gold and silver.
Simultaneously, attention has shifted to U.S. monetary policy, where Federal Reserve officials have signaled a potential rate cut in July. Vice Chair for Supervision Michelle Bowman stated on Monday that she’s open to easing rates should inflation continue its downward path.
“We’re closer to our 2% target, and labor market softening is evident,” she said during a moderated event in Chicago.
Fed Governor Christopher Waller echoed this sentiment, suggesting that if jobless claims and core inflation prints continue to trend lower, “a rate reduction could be appropriate within the next few FOMC meetings.”
However, Chair Jerome Powell has remained cautious, stating the Fed needs “greater confidence” before acting. Markets are now pricing in a 68% probability of a July rate cut, according to CME FedWatch data, up from just 47% last week.
Implications for Bullion Traders
Lower interest rates tend to weaken the U.S. dollar and reduce the opportunity cost of holding gold, which could support a rebound in bullion. However, for now, easing geopolitical tension and a lack of immediate Fed action have capped upside potential.