Platinum prices have recently jumped to a near 11-year high of $1,350 per troy ounce before falling back below $1,300. The gap between platinum and gold has shrunk to less than $2,050 per troy ounce, the smallest difference in three months. Recent trading patterns show signs that the price increase might be slowing down. Platinum ETFs tracked by Bloomberg have seen significant outflows, with holdings dropping nearly 190,000 ounces in just a week. This nearly cancels out the inflows since the start of the year. ETF investors seem to be taking advantage of high prices by selling their shares. This analysis provides market data and insights for informational purposes only, and suggests careful research before making any investment decisions. The recent spike in platinum prices was quick and sharp—possibly too sharp for its own good. Prices reached levels not seen since mid-2013, just below $1,350 per troy ounce, but soon fell back under $1,300. Although this still represents a strong gain, the speed of the decline indicates a lack of sustained demand or buying support. The shrinking gap between platinum and gold, now below $2,050 per ounce, suggests the increase might have been excessive in relation to market conditions. This gap generally serves as an indicator of value within the precious metals market, and it’s notable that this spread is currently at its tightest in three months. The selling from exchange-traded funds is significant. In just one week, around 190,000 ounces were sold. This selling almost wipes out all the inflows since January. The message from ETF holders is clear: they’ve achieved their goals from the rally and are now moving on. This doesn’t necessarily indicate a loss of faith in platinum’s long-term potential; instead, it’s about locking in profits after a sharp increase. The fact that such large selling happened while prices stayed high shows limited confidence in the recent rise. Trading patterns indicate that while momentum drove prices up, it lacked solid buying interest across the industry. We have also noticed a slight decline in trading volumes during the upward movement, which isn’t a good sign if this was the start of a larger rally. Typically, fast price increases followed by light trading and selling tend to create volatility as the market tries to find a more stable level. In this situation, it’s wise to be cautious. Instead of acting quickly, we should adopt a more cautious approach. It’s important to wait for more confirmation before concluding that this correction is over. If prices rise again but fail to reach the recent high, that would suggest a temporary peak. Should ETF selling continue this week, especially as prices hover around $1,280–$1,300, it could push prices even lower. We should also consider the larger economic context. Key inflation data and central bank actions continue to impact commodity markets. Any significant changes in US or European inflation expectations could greatly influence platinum prices. We’re closely monitoring changes in options markets related to platinum. If the premiums on derivatives start to increase without a rise in spot prices, it might indicate hedging instead of new investments. This often leads to price corrections as traders reduce their exposure rather than build on it. Rather than trying to chase prices—especially given the recent aggressive selling by ETF holders—it makes more sense to maintain a balanced view. We should watch positions closely and see if the $1,250–$1,280 range holds as a support level. There could be opportunities ahead, but current indicators don’t yet suggest a strong bias in either direction.

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US equity futures are up, with S&P 500 futures gaining 21 points, or 0.35%, and Nasdaq futures increasing by 0.4%. The Russell 2000 is doing particularly well, with futures rising by 1.2%. This uptick follows comments from Fed Governor Waller, who suggested that a rate cut in July could happen and that inflation related to tariffs won’t last long. Additionally, today is the day when monthly options expire. Waller’s comments indicate that interest rate cuts may occur sooner than previously expected. By suggesting that tariff-driven inflation isn’t a long-term issue, he seems to ease concerns among investors. This has energized the equity markets, especially small-cap stocks, which tend to respond more strongly to supportive policies. The Russell 2000’s significant increase is linked to hopes that lower borrowing costs will relieve pressures on companies with smaller profit margins and a domestic focus. The expiration of monthly options adds further momentum—not just in one direction. When major derivatives expire, positions often get closed or extended, prompting dealers to adjust their hedges, especially if market movements are rapid, like today. This means we’re not just observing typical positioning but a careful recalibration by participants wanting to stay delta-neutral. We believe the nature and timing of these moves show they are not just reactions. This isn’t merely trend-following; there’s a recalibrated probability in play, particularly as traders anticipate a rate cut sooner than September, which was previously deemed the earliest possible date. It’s crucial for volatility traders and those dealing with complex options structures to consider these changes. With the expiry behind us, open interest will reset to new levels. We can expect gamma positioning to differ next week, possibly resulting in less hedging pressure in both directions. This usually allows major indices’ spot prices to move more freely, leading to wider intraday swings in prices. Consequently, implied volatility may increase unless new flows tamp it down. Examining forward rates and Fed Funds futures, we notice changes over the last two sessions. Short-term yields are falling, and this isn’t just a coincidence; it’s closely aligned with Waller’s comments and the flows related to options expiry. If a quicker path for rate cuts is back on the table, the term premium on longer maturities may continue to decrease, influencing how index-linked derivatives behave, especially during macroeconomic data releases. We are also monitoring skew behavior. With rising equity prices and a declining VIX, call options are increasing in value faster than puts, making the skew flatter or even inverted in some cases. This affects the OTC market, as dealers need to adjust their vega exposure. If actual volatility remains low heading into next week, this trend may persist. However, any unexpected hawkish signals or yield spikes from Treasury auctions could disrupt these assumptions. In summary, the end of the week has revealed more than just surface gains. We are witnessing early signs of a shift in both market sentiment and positioning. Expect next week to establish new baselines in rate-sensitive instruments, enhanced delta and gamma activity in morning sessions, and a broader reconsideration of downside coverage preferences.

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The World Gold Council has released its annual survey about how central banks view Gold reserves and future purchases. This year, a record 73 central banks participated, the most since the survey started eight years ago. The results show that 95% of central banks expect to increase their Gold reserves in the coming year. More than 40% plan to buy Gold soon, up from 29% last year.

Gold’s Importance in Emerging Economies

Approximately 72% of central banks expect a small increase in Gold as part of their total currency reserves over the next five years. The main reasons for this include Gold’s strong performance during crises, portfolio diversification, its role as a store of value, and its effectiveness against inflation. These reasons are especially highlighted by emerging economies, while developed countries tend to focus more on Gold’s historical significance. The survey indicates that Gold is becoming increasingly important for central banks, signaling that significant purchases are expected soon. The World Gold Council’s findings show that monetary authorities are viewing Gold not just as a static asset but as a strategic tool. With the jump from 29% to over 40% of banks planning to buy Gold soon, it’s clear that many institutions plan to act quickly. This shift indicates a serious commitment, backed by evident operational momentum.

Shifts in Reserve Management

The changes in emerging markets point to a broader shift in how reserves are managed. These institutions often manage portfolios that are more exposed to volatility, and they are looking to protect themselves against potential external shocks. This change influences overall demand and could affect price correlations and volatility. For those engaged in options or structured products tied to commodities, this shift is significant. When central banks buy Gold, it helps stabilize prices, especially during market downturns or currency stresses. Traders might see different implied volatility expectations than in previous cycles. There is also a noticeable difference in motivations between emerging and developed economies. Emerging markets focus on active strategies to maintain value and manage inflation, while developed nations stick to traditional reserve practices. This disparity may lead to differences in physical demand, causing occasional mismatches between futures and spot prices. Such mismatches may be more evident during significant rebalancing events, creating unique opportunities. It’s crucial to monitor how guidance from these institutions affects Gold holdings. While there’s no specific timetable announced, sudden changes could cause rapid fluctuations in gamma, particularly during expiry periods. Thus, strategies based on mean-reverting expectations may need reevaluation in the upcoming weeks. Additionally, even a small increase in Gold’s share of reserves can impact familiar metrics. Reserve managers do not act like individual investors. Their infrequent but large reallocations can drain liquidity from nearby asset classes. This could put pressure on bond spreads, especially in commodity-linked sovereigns. Therefore, it is essential to keep an eye on cross-asset correlations. This growing interest from the official sector reflects not only long-term strategies but also changes in short-term price supports. We need to adjust how we model floor protection for directional products based on these developments. The message is clear: real allocation is in progress; it’s not just theoretical or future-oriented. What truly matters are the actual weights of these allocations. Create your live VT Markets account and start trading now.

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The gold price stayed steady after the US Federal Reserve decided to keep interest rates the same. There is a belief that two interest rate cuts may happen this year, aligning with what many in the market expect. However, seven out of 19 Federal Reserve members do not predict any rate cuts this year. Even though expectations for rate reductions have decreased since May, the possibility of lower US interest rates is still supporting gold prices. It’s unlikely that this belief will lead to a major price rise. Market sentiment indicates that while changes are small, the trend of lower interest rates helps support gold.

Impact on Currency Pairs

In other markets, the EUR/USD and GBP/USD currency pairs experienced fluctuations due to different economic factors. The US Dollar gained strength, even with the Federal Reserve’s cautious comments, which affected the EUR/USD pair. The GBP/USD fell below 1.3500 because of weak data from the UK and a higher demand for the US Dollar as a safe investment. Geopolitical tensions in the Middle East have also affected the market, leading investors to seek safe assets like gold. The ongoing conflict between Israel and Iran has put additional pressure on markets, creating a challenging environment for stocks and causing US Treasury yields to drop. This uncertainty continues to impact financial markets and investor trust worldwide. With the Federal Reserve holding rates steady and the market anticipating possible easing later in the year, there is some quiet support for gold. However, nearly a third of policymakers do not expect any cuts at all in 2024, adding complexity for those analyzing upcoming data for signals of direction. What we have observed is that early expectations of aggressive rate cuts have slowed. Yet, the idea of lower rates still helps support gold prices. While a significant rally isn’t expected, it does offer protection against steep declines. Lower yields typically reduce the cost of holding non-interest-bearing assets like gold, which explains its stable performance.

US Dollar Outlook and Market Tensions

In the FX markets, the US Dollar remains strong despite softer comments from Federal Reserve officials, indicating a preference for stability over yield right now. The Euro has weakened due to economic hesitation in some regions and modest gains by the Dollar. Sterling has faced pressure due to disappointing UK data and signs of slowing growth in key sectors. The GBP/USD pair recently dropped below a key level, suggesting buyers are less interested. This shift may affect how traders prepare for upcoming Bank of England commentary or significant UK data releases. Traders should pay attention to bond markets, especially US Treasury yields, which have been declining. This drop often coincides with gains in gold, shaping sentiment around risk and safety. Geopolitical tensions, particularly ongoing issues in the Middle East, continue to impact the market, supporting safe-haven assets. Although these events haven’t caused dramatic market moves daily, they still influence demand for safer investments. If conditions worsen, we might see implied volatility in equity and FX options rise. This brings not only directional risk but also value in time-sensitive instruments. An increase in uncertainty typically boosts demand for options that hedge exposure. From our viewpoint, the upcoming inflation data and announcements from central banks will be key indicators for interest rate expectations. This, in turn, will likely influence trades in precious metals, Dollar pairs, and interest rate products. Traders should stay alert to these announcements, as even small surprises can lead to significant price adjustments. Shorter-term forward curves remain flat, showing the ongoing conflict between those expecting rate cuts and those betting on a hold. This creates opportunities, but it also means timing is more critical than usual. Create your live VT Markets account and start trading now.

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Governor Waller adopted a more cautious approach after the Federal Reserve chose to keep interest rates steady. He isn’t too worried about how tariffs affect inflation and hinted that rate cuts might happen as soon as July. The market reacted positively. The Dow rose by 111 points, the Nasdaq went up by 65 points, and the S&P climbed by 15.13 points. However, the US dollar saw a slight drop following Waller’s comments. Looking at specific currency pairs, the USDJPY fell from a high of 145.71 to 145.54. Last week, it peaked at 145.47, and a key retracement level from May is at 145.375. If it goes lower than these levels, it might show that sellers are gaining control. The USDCHF also dropped slightly from a high of 0.8176 to 0.8162. The 100 and 200-hour moving averages are at 0.8159. If the price falls below these averages, it could shift the short-term trend toward the downside. Waller’s unexpected shift toward easing has raised expectations for a rate cut sooner than anticipated, likely in July. He downplayed the inflation risks from tariffs, giving markets the confidence to take more risks. The swift response in equity indices showed that investors are focusing on future guidance rather than the current pause in policy. Bond markets are also adjusting, responding to his views by changing yield curves. While stock gains were notable, the currency markets had a more mixed response. The dollar’s dip wasn’t drastic but allowed short-term traders to reposition. Against the yen, the dollar fell below last week’s high and crucial retracement levels from May’s gains. From a trading viewpoint, breaking below 145.47 brings attention to the midpoint of the previous upward movement. This suggests that sellers are starting to take charge again, albeit quietly, but with growing momentum. If the price stays below that 50% level, further downward movement is likely in the upcoming sessions. We’ve also noticed subtle but important changes in the USDCHF rate. After hitting 0.8176 earlier, it slid back towards the 100-hour and 200-hour moving averages around 0.8159. This is a significant price level; dropping below this range won’t be ignored. Technical traders will pay close attention here, as sustained selling pressure could push the bias more decisively toward the bearish side. Given these developments, we’ve adjusted our immediate positioning strategies. It’s now clearer how to react. Observing how price interacts with key technical points will be more important than broad economic themes for the time being. If intraday volatility increases, it will be driven by recalibrated expectations rather than surprises. While entries and exits might tighten, the opportunities will become more defined.

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US crude oil inventories fell sharply by 11.5 million barrels last week, marking the largest drop in almost a year. This decline was mainly due to a decrease in net imports of 1.8 million barrels per day, caused by lower imports and higher exports. Exports increased even with the smaller price difference between WTI and Brent, which narrowed to just $2.5 per barrel at the week’s start—the lowest this year. This indicates that exports might not stay at this level, suggesting a potential reversal in inventory reduction.

Tight Supply Situation

Currently, US crude oil inventories are 10% below the 5-year average, indicating a tight supply. In Cushing, the level is even lower, around 40% below the average, which means WTI prices are getting closer to Brent prices. The big drop in US crude inventories—11.5 million barrels—isn’t just about higher demand or seasonal changes. The main factor seems to be the sharp decline in net imports, which dropped by 1.8 million barrels a day. This means fewer barrels are coming in, and more are going out of the country. This situation usually doesn’t last long, especially as the price differences begin to close. It was surprising to see exports rise even with such a small price gap of $2.5 per barrel between WTI and Brent at the start of the week. At this narrow spread, there’s little motivation for international buyers to prefer WTI over Brent. This is the smallest difference we’ve seen this year, removing the usual incentives for exports. It suggests that the current export levels might not be sustainable. If the price gap stays this narrow—or gets even smaller—traders who are hoping for lower US inventories might find themselves unprepared if exports drop.

Regional Pricing Dynamics

The inventory gap is becoming serious. Stocks are now about 10% below the 5-year average, which raises pressure on local supply and supports higher US crude prices, especially during the busy summer months. The situation in Cushing is even more alarming, as inventory levels there are roughly 40% below the 5-year norm, causing WTI to trade closer to Brent than it has for some time. Such a change occurs only when supply at the delivery hub starts to affect prices more than global movements. With such low stock in Cushing, any supply issues—like pipeline disruptions, refinery changes, or weather disturbances in the Gulf—could impact futures prices. In the near term, we may see more focus on regional price differences rather than relying heavily on international benchmarks for domestic assessments. WTI’s closeness to Brent reflects not just a shortage but also traders adjusting to increased price pressures from within the US rather than looking overseas. Given the current situation, it’s crucial to monitor forward pricing trends, export volumes, and any changes at coastal terminals that might indicate whether export pressure is easing. If it does, the sharp inventory drop could level off—or even reverse—bringing net imports back to more balanced levels. Until then, pricing risks lean towards low inventories and ongoing short-term price increases. Short call spreads might feel more vulnerable, especially if lower Midwest stocks continue to decline. Additionally, any strategies based on a growing export margin could struggle as the Brent-WTI spread remains narrow. We’ll need to keep an eye on weekly Energy Information Administration reports—not just for the overall crude change, but for regional stock variations and total exports. If flows through the Gulf Coast begin to slow, current long positions will need protection. Otherwise, being overly exposed without hedging could quickly lead to losses. Create your live VT Markets account and start trading now.

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Chris Waller supports the idea of a rate cut at the upcoming July meeting. He believes tariffs will not cause long-term inflation, viewing them as a one-time event. Waller advised that the Federal Reserve should not wait for a significant drop in the job market before making cuts. While he recognizes the current strength of the job market, he also pointed out the potential for higher unemployment among recent graduates.

The Fed’s Stance on Interest Rates

The Fed has kept interest rates unchanged for six months, expecting inflation to rise, which hasn’t happened. Waller thinks it’s wise to lower rates and observe the inflation results. He stated that even a 10% tariff on all imports would have almost no impact on overall inflation. Waller hints at a more relaxed approach, suggesting that there could be differing opinions within the committee at the upcoming meeting. He commented, “I’m all in favor of saying maybe we should start thinking about cutting the policy rate at the next meeting, because we don’t want to wait till the job market tanks before we start cutting the policy rate.” This indicates a notable change in attitude. Waller seems more open to lowering the federal funds rate, not due to an impending recession, but because inflation is behaving better than expected. After six months of caution, the anticipated price increase has not occurred. Instead, inflation data has surprised positively by remaining low. Waller’s comments suggest a preference for acting before job market weaknesses arise instead of responding after they occur. His view that tariffs will have a limited effect on inflation counters earlier concerns that trade actions would create lasting price increases. This isn’t merely semantics; it affects the Fed’s entire strategy. If the Fed does not need to wait for clear job losses before cutting rates, expectations for future policy could shift significantly.

Concerns about the Job Market

The strength of Waller’s position is based on two key assumptions: first, that inflation is unlikely to rise quickly, and second, that cutting rates now could prevent a steeper downturn later. It’s particularly significant that a rate cut is being considered before any major job market crisis occurs. This indicates that Waller, and perhaps others, trust the current decrease in inflation more than they fear a sudden increase. The future path of policy depends heavily on whether this view is shared among voting members. If it is, the rates market may have to adjust its expectations for rate cuts as soon as July. This adjustment won’t happen alone. Eurodollar and SOFR futures, already leaning toward cuts later this year, will need to not only adjust nominal changes but also revise volatility expectations and forward rate spreads. We should note Waller’s concern regarding higher unemployment for recent graduates. While not an immediate policy driver, it suggests a broader issue about generational challenges in the job market. This is often overlooked in mainstream data but could be a growing concern for the Fed. The struggles of one group can sometimes indicate a wider economic weakness, so these signs should not be ignored. What should we take away from this? Keep an eye on positions that expect rates to remain steady over the summer; if more voices support Waller’s view, volatility will shift, and changes may happen sooner than many think. Traders who expect the Fed to wait for further job market issues may find themselves misaligned. In short, the current risk distribution around policy expectations is shifting. It’s also important to note that market reactions in the fixed income volatility area, especially at the short end, could be sensitive to this change in sentiment. There’s a clear difference between a central bank responding to weak data and one that proactively addresses anticipated issues. This influences how we perceive upcoming policy signals from the committee. In summary, we’ve transitioned from a period where rate cuts depended on conditions to one where they may be warranted without hesitation. Whether this change occurs in July or September is now a very relevant and tradable question. Create your live VT Markets account and start trading now.

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India: A Key Growth Driver The International Energy Agency (IEA) has shared its medium-term outlook, forecasting that global oil demand will peak by the end of the decade. In the U.S., demand is expected to decline, but not as sharply as last year, with electric vehicles projected to replace 5.4 million barrels per day by 2030. Oil use in power generation, particularly in Saudi Arabia, is likely to drop as gas and renewable energy take the lead. However, demand remains high in the petrochemical industry. Demand trends are shifting; China’s increase will be modest, while the drop in U.S. demand will be less severe due to lower prices and slower growth in electric vehicle adoption. India stands out as the largest growth driver, consuming 5.5 million barrels daily compared to China’s 16.6 million. If market conditions stay stable, the IEA predicts that oil market capacity will grow twice as fast as demand by 2030, mainly due to the U.S. and Saudi Arabia. The IEA points out that capacity growth will be strong at the start of the decade but will slow down as it comes to a close. Investors are urged to conduct thorough market research, considering the risks and emotional stress involved in market investments. Oil Demand Plateau By the end of the decade, projected oil market capacity is set to exceed demand by two-to-one. This could lead to a significant imbalance between production and market needs. The latest IEA findings suggest that strategies based solely on supply and demand may soon be outdated. Instead, companies will need to adapt to long-term trends that might not be immediately clear on price charts. The forecast that demand will plateau around 2030 does not just signal the end of traditional growth; it also has real implications for contract pricing and volume assumptions over various timeframes. For those involved in energy-linked derivatives, it’s crucial to consider how capacity expansion—especially from the U.S. and Saudi Arabia—will shape future market dynamics. The IEA states that U.S. output will remain a significant factor, even with a slowdown in domestic consumption. This indicates that market players should focus not just on domestic consumption trends but also on production growth and export potential. The U.S. seems set to impact global supply chains more than before, making price differences increasingly influenced by international flows rather than just local demand. Create your live VT Markets account and start trading now.

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The Canada Producer Price Index (PPI) for May decreased by 0.5%. This is more than the expected drop of 0.1%. In April, the PPI had already fallen by 0.8%. Producer prices increased by 1.2%, down from 1.9% the previous month. The Raw Materials Price Index fell by 0.4%, better than the earlier drop of 3.3%. Looking at the year-over-year data, the Raw Materials Price Index improved from -3.9% to -2.8%. These numbers reflect the changes in costs faced by producers over the past months. This information gives us insight into the Canadian economy. The sharper PPI drop of 0.5% suggests that producers are dealing with lower input costs. This follows an earlier drop of 0.8%, indicating a trend rather than a one-time event. We may see a slowdown in cost growth throughout production chains. Even with a 0.4% monthly decline, the improvement in the year-over-year Raw Materials Price Index highlights an interesting point. While raw materials prices are still falling, the rate of decline is less severe. There is some ongoing monthly softness, but overall, we see signs of stabilizing prices. Our team interprets this as disinflationary, indicating we haven’t yet seen a significant increase. The slower rise in producer prices, now at 1.2% instead of 1.9%, reinforces this idea. Richardson noted that PPI often leads consumer prices, making these figures especially relevant now. We expect that the declines in production and input costs will eventually lead to lower prices for goods. However, some more mechanized sectors may experience this effect more slowly. Markets trying to predict future inflation will need to consider these numbers. There’s no strong indication of a rebound or an increase at this point. The unexpected drop in monthly figures challenges earlier expectations. MacDonald had predicted May would show a gentler decline, but the sharper drop has changed that outlook. As a result, positions will likely shift toward anticipating softness in the market rather than support for prices. This doesn’t mean a complete change or a breakdown, but it does suggest we’re moving away from the idea of a short-term inflation spike. In our view, reduced cost pressure prompts adjustments across various time frames in trading. The near term should be approached carefully but confidently, especially in sectors sensitive to input costs and inflation. Since the changes are gradual rather than sudden, any adjustments in market volatility should consider the needs of individual traders. While we can’t expect immediate effects on final demand, the current trend is reducing pressure in upstream pricing. This eases the strain on front-month inflation indicators. With each new piece of data, we need to adjust our approach not only for direction but also for the rhythm of these changes.

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Gold prices have steadied just below $3,400 per troy ounce after briefly exceeding this level. The ongoing uncertainty in the Middle East is likely to support the metal’s value, but the sharp price increase since the beginning of the year may discourage large purchases. Next week, we expect data on gold deliveries between Hong Kong and China for May, which could showcase April’s strong demand from China. For gold to reach record highs again, we may need to see an escalation in the Middle East, like potential U.S. involvement in Iranian issues. The information presented includes forward-looking statements that come with risks and uncertainties. It is not investment advice, and individuals should conduct their own thorough research before making investment decisions. We do not take responsibility for errors or lack of timely updates and emphasize that investments can result in total loss. Neither the author nor the platform act as registered investment advisors, and this content is not intended as investment guidance. The author has no financial interests or connections with any mentioned companies and has not been compensated by any external parties for this writing. The author will not be liable for any errors, omissions, or damages related to this information. Gold has recently lingered just under the $3,400 mark, reflecting a mix of market hesitation and geopolitical concerns. The significant rise in gold’s value at the start of the year may lead to a temporary pause in prices, not due to lack of demand but as a normal cooling period after a steep increase. We can’t overlook how market positioning can trigger a halt, particularly when new catalysts are needed to reignite the upward trend. Keep an eye on the upcoming trade data between Hong Kong and mainland China. If May’s figures mirror April’s strong demand for gold—likely driven by currency hedging and local uncertainties—demand from the East is still strong. However, this alone may not be enough. For gold to hit its recent highs again, we need to consider additional geopolitical risks. The possibility of Western military involvement in the Gulf region remains a significant, unresolved factor. If the U.S. edges closer to direct conflict with Iran, we could see increased demand for safe-haven assets, not only in physical markets but also in futures and options. Hedgers might respond quickly given current open interest, as there has been little unwinding, indicating that defensiveness remains in portfolios. Right now, we are in a holding pattern. Volatility levels are steady, but there is a slight upward shift in skew—an early sign that some traders are pricing in tail risks for short- to mid-term options. This could lead to more aggressive protective bids, especially in call spreads if traders expect a rise due to new geopolitical developments. Traders in the derivatives market should closely monitor trends in implied versus realized volatility over the next two weeks. Short gamma exposure has been calm but could spike if prices push firmly above key resistance. In contrast, lingering prices may lead to theta burn for those who overpay for premium without strong directional conviction. No significant seasonal downturn is expected, but liquidity will play a crucial role. Watch for volume changes during key regional trading hours, as reactions to news may initially seem exaggerated before settling down. This is particularly relevant when macroeconomic data from Asia coincides with risk events in the United States. Adjust your risk exposure based not only on price movements but also on the timing and likelihood of external catalysts. Being flexible is better than acting too soon. In the short term, rate expectations are not the main drivers; rather, it’s fear and the flight to perceived safety that influence prices more significantly. It is also important to consider how futures curves interact with ETF inventories. Sudden inflows may indicate renewed retail interest rather than institutional rebalancing, which could impact volatility floors and the effectiveness of hedging strategies. While the current narrative focuses on defense and responses to potential escalation, the lack of price retreat suggests ongoing underlying demand. The next two weeks may not clarify the broader macro outlook, but heightened geopolitical tensions might test whether the current support levels are strong enough for another upward movement.

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