Gold Holds Firm as Policy Uncertainty Reinforces Safe-Haven Demand

Gold traded in a relatively stable range last week as investors balanced renewed geopolitical uncertainty with evolving monetary policy expectations. The fragile US-Iran ceasefire came under renewed pressure, reviving safe-haven interest, while stronger inflation signals across Asia and hawkish messaging from the US Federal Reserve continued to support higher bond yields and the US dollar. Softer US services activity and a widening trade deficit contrasted with stronger German industrial production, highlighting a mixed global economic backdrop. Equity markets finished the week mixed, while Treasury yields, oil prices, and the US dollar all moved higher.

Although gold experienced significant volatility during the first half of 2026, market conditions have recently stabilized following the sharp correction from record highs. Seasonal demand patterns and softer trading activity, particularly in China, have contributed to the current consolidation phase. Investors are now focused on upcoming catalysts, including the release of FOMC meeting minutes, the Federal Reserve's July policy meeting, and the Jackson Hole symposium, all of which could influence interest rate expectations and precious metals prices.

Investment demand moderated in June as physically backed gold ETFs recorded global outflows of US$8.9 billion, led by North America and China. Rising real yields and a stronger US dollar increased the opportunity cost of holding gold, encouraging some investors to reduce their exposure. Despite June's weakness, global gold ETF flows remain positive for the first half of the year, supported by record inflows from Asia and continued European demand.

Silver largely tracked gold's performance but continued to benefit from resilient industrial demand, particularly from renewable energy, electronics, and artificial intelligence technologies. Overall, while short-term price action remains driven by interest rate expectations and geopolitical developments, long-term fundamentals for precious metals remain constructive, supported by portfolio diversification demand and ongoing global economic uncertainty.