Gold has struggled to keep pace with other commodities as tight global energy markets and rapidly shifting central bank expectations reshape market positioning. Ongoing US–Iran tensions have not translated into the usual lift for safe-haven assets; instead, higher oil prices and a more hawkish tilt from most central banks have weighed on the metal. Some financial institutions have consequently adopted a more guarded near-term stance.
TD Securities says the lack of a definitive US–Iran deal keeps supply risks elevated, supporting energy and base metals at gold’s expense. It adds that commodity trading advisors (CTAs) have seen momentum flatten, limiting buying catalysts and leaving prices range-bound unless key technical triggers are breached. OCBC has lowered its gold forecasts, citing a stronger US dollar, rising Treasury yields, and potential softness in physical demand from India, alongside extended elevated oil prices and hawkish Fed repricing. Together, the banks point to a short-term consolidation with downward pressure while longer-term structural demand remains intact.
Gold’s Underperformance Amid Energy Market Turmoil
We see gold struggling as long as the conflict in Iran keeps energy markets tight and boosts oil prices at its expense. With WTI crude futures holding firm above $115 per barrel last week, capital is clearly favoring energy commodities over precious metals. This dynamic suggests gold will likely remain capped below key resistance levels in the near term.
The Federal Reserve’s hawkish stance, reinforced by the unexpectedly strong May jobs report released last Friday, signals that interest rates will stay elevated. As the 10-year Treasury yield pushes back toward 4.80%, non-yielding gold becomes much less attractive for institutional money. We anticipate this pressure from rising yields and a strong dollar will continue to limit any significant upside for the metal.
Positioning Strategies for a Range-Bound or Bearish Gold Market
Given this outlook, we are considering strategies that profit from a sideways or downward trend in the coming weeks. Selling call options above the current trading range, such as at the $2,200 strike price for July contracts, could be an effective way to generate income. This approach aligns with the view that a major breakout is unlikely while geopolitical focus remains on energy.
For those anticipating a further slide, purchasing put options offers a direct way to position for downside movement. This market feels similar to past periods, like in 2013, where a strong dollar and the prospect of Fed tightening kept gold prices contained for an extended time. We believe the current environment is better suited for range-bound or bearish derivative plays rather than bullish ones.
