Gold and silver closed a volatile week on a mixed note, caught between safe-haven demand from the ongoing US–Iran conflict, a Federal Reserve that held rates but sounded far from dovish, and a sharply weaker dollar.
FOMC Meeting
The FOMC held its policy rate steady at 3.50–3.75% on Wednesday, but three dissenting policymakers pushed for a hike, and Fed Chair Kevin Warsh’s press conference reaffirmed the Fed’s inflation-fighting resolve without signaling imminent tightening. Markets are now pricing roughly a 63–65% probability of a rate hike not a cut at the September meeting, an unusual dynamic driven by war-linked inflation pressure rather than the typical late-cycle rate-cut narrative. This kept real-yield pressure alive even as gold found intermittent safe-haven support through the week.
Geopolitical tensions
Last week saw a sharp re-escalation after a brief lull. Trump had paused US strikes the previous Friday to give diplomacy a chance, but that pause unraveled on Tuesday, July 28, when Iran fired ballistic missiles at a US base in Jordan its first attack on US forces since the pause began. US Central Command said all missiles were intercepted, but the attempted strike effectively ended the ceasefire window.
Trump responded angrily on Wednesday, vowing to hit Iran “hard,” while framing the attack as the work of a rogue faction within Iran’s leadership rather than the officials Washington had been negotiating with. By early Thursday, the US had launched a fresh wave of airstrikes on dozens of Iranian military targets, including a strike on Qeshm Island, aimed at degrading Tehran’s ability to threaten US troops, regional allies, and shipping.
Gold climbed above $4100 today, recovering losses from the previous week after President Donald Trump said peace talks with Iran will resume today, sending oil prices lower and easing concerns over inflation and the interest rate outlook. US President Donald Trump said peace talks with Iran will resume after key Middle Eastern allies urged a diplomatic solution and the reopening of the Strait of Hormuz.
Currency movement
The Dollar Index suffered its worst week in over a month, sliding from above 101.20 to below 100 by Friday on suspected Bank of Japan intervention to defend the yen which rallied sharply off 40-year lows and growing market doubt over the Fed’s inflation- fighting credibility. Dollar weakness underpinned bullion’s early-week strength, before a late-week dollar rebound contributed to Friday’s pullback in both metals. The rupee tracked the dollar’s softness and posted its best weekly gain in four months, appreciating
roughly 1% to close near 95.35/USD on Friday, supported by FPI inflows and RBI intervention even as elevated crude prices and geopolitical risk capped sharper gains.
WGC GDT Report
The World Gold Council’s Q2 2026 Gold Demand Trends report, released Thursday, showed total gold demand steady year-on-year at 1,269 tonnes, as central banks bought at the fastest pace ever recorded for any second quarter in the WGC’s data series, offsetting continued Western ETF redemptions. Asian ETF markets where gold functions more as a savings and currency hedge than a tactical rate bet recorded net inflows even as North American funds saw outflows, underscoring a structural divergence between tactical and strategic holders of gold.
WGC’s India Focus Q2 report showed jewellery demand recovering sequentially (+14% q/q to 75 tonnes) but down 15% y/y, weighed by the mid-May import duty hike (6% to 15%) and record-high domestic prices, even as gold spending touched a Q2 record of roughly Rs 1,979 billion (+50% y/y). Global gold ETFs recorded net outflows of 45 tonnes, concentrated in North America; June alone saw $8.9bn in outflows across every region. Asia was the relative bright spot, posting its strongest H1 inflows on record.
While India’s ETF investors have been buying gold dips through June and early July, while Western (especially North American) ETF holders have continued trimming positions consistent with the broader Q2 divergence where central bank buying and Asian demand offset Western ETF selling.
Economic data this week
Key catalysts for next week include US ISM manufacturing and services PMIs, ADP employment, and Friday’s July nonfarm payrolls report all likely to shape September rate-hike pricing alongside any fresh developments in US–Iran negotiations and continued yen-intervention headlines.
Outlook
Gold and Silver has been trading range bound from last one month and Gold needs to sustain above $4200 (~Rs 145,000) and Silver above $62 (~Rs 227,000) to resume uptrend.
