Gold prices (XAU/USD) posted a powerful rebound throughout the first half of Monday's European session, shooting away from multi-month lows and breaking back into the $4,331 per troy ounce range.
This sharp rally was triggered by a drastic shift in the global macro risk landscape after the United States (US) and Iran officially agreed to a comprehensive peace pact to end their four-month war.
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✅ Fundamental Dynamics: Strait of Hormuz "Free-Toll" & Fed Bet Cut
Commodity and foreign exchange markets moved aggressively in response to the largest physical de-escalation of the year:
- ⚡Peace Pact Achieved: Washington and Tehran confirmed the success of the weekend peace draft brokered by Pakistan. The formal agreement, scheduled to be signed in Switzerland on Friday, June 19, includes a permanent cessation of military operations, the lifting of economic sanctions by European countries (UK, France, Germany, Italy), and the dismantling of Tehran's nuclear program.
- ⚡Crude Oil Prices Crash: President Donald Trump's announcement that the Strait of Hormuz was officially reopened to free traffic and the US Naval Forces' lifting of the blockade immediately sent crude oil prices plummeting to a two-month low. This slump in energy prices instantly alleviated market concerns about the threat of a global upstream inflation spiral.
- ⚡Fed Interest Rate Odds Cool: The waning threat of upstream energy inflation has led market participants to lower bets on aggressive monetary tightening. According to the latest CME FedWatch Tool data, the probability of a Federal Reserve interest rate hike in December has slid to 64% (from 69% last week). The decline in US bond yields and the weakening US dollar (USD) are the main fuels for gold's massive recovery rally (short-covering).
This sharp rally was triggered by a drastic shift in the global macro risk landscape after the United States (US) and Iran officially agreed to a comprehensive peace pact to end their four-month war.
--------------------------------------------------------------------------------------------------
✅ Fundamental Dynamics: Strait of Hormuz "Free-Toll" & Fed Bet Cut
Commodity and foreign exchange markets moved aggressively in response to the largest physical de-escalation of the year:
- ⚡Peace Pact Achieved: Washington and Tehran confirmed the success of the weekend peace draft brokered by Pakistan. The formal agreement, scheduled to be signed in Switzerland on Friday, June 19, includes a permanent cessation of military operations, the lifting of economic sanctions by European countries (UK, France, Germany, Italy), and the dismantling of Tehran's nuclear program.
- ⚡Crude Oil Prices Crash: President Donald Trump's announcement that the Strait of Hormuz was officially reopened to free traffic and the US Naval Forces' lifting of the blockade immediately sent crude oil prices plummeting to a two-month low. This slump in energy prices instantly alleviated market concerns about the threat of a global upstream inflation spiral.
- ⚡Fed Interest Rate Odds Cool: The waning threat of upstream energy inflation has led market participants to lower bets on aggressive monetary tightening. According to the latest CME FedWatch Tool data, the probability of a Federal Reserve interest rate hike in December has slid to 64% (from 69% last week). The decline in US bond yields and the weakening US dollar (USD) are the main fuels for gold's massive recovery rally (short-covering).
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.