Gold and Silver Tumble as Hormuz Tensions Fuel Inflation Fears

Spot gold dropped 1.55% to $4,055.40 an ounce, while silver retreated 2.35% to $58.36. The shift in market sentiment follows a volatile weekend in the Middle East, where U.S. and Iranian forces engaged in strikes and counter-claims over the critical waterway. With tanker traffic plunging, the resulting spike in oil prices has emboldened bets that the Federal Reserve will maintain a hawkish stance to combat renewed inflationary pressures.

Bond markets are reflecting this defensive posture, with the 10-year Treasury yield climbing to 4.582%. Markets are now pricing in a 68% probability of a September rate hike, a significant reversal from the post-jobs report outlook earlier this month. This combination of higher yields and a firmer dollar is creating a formidable headwind for non-yielding assets, leaving gold bulls struggling to hold ground above the $4,000 support level.

Technically, both metals are currently under bear control. Gold faces a critical resistance ceiling at $4,091, while silver remains pressured below its $61.71 threshold. Traders are now looking toward upcoming CPI data and congressional testimony from Fed Chair Kevin Warsh to determine if the current geopolitical bid can overcome the macro-driven sell-off.