Said Islam Salman, a financial markets expert, that global gold markets are currently going through an extremely complex phase, driven by the collision of two major factors. The first is the relative easing of geopolitical risks following the recent agreement between the United States and Iran, while the second is the persistence of elevated global inflation levels, which is forcing the U.S. Federal Reserve to maintain higher interest rates for a longer period, placing direct pressure on gold prices.
Salman explained that gold has historically benefited from lower interest rates and weaker real bond yields, as the precious metal does not generate a fixed return. Therefore, it becomes more attractive when returns on debt instruments decline. He added that markets had previously expected the Federal Reserve to begin cutting interest rates during 2026, with the possibility of two or three gradual rate cuts, but the resurgence of inflation and rising energy prices have completely reversed those expectations.
He noted that the recent military escalation in the Middle East, coupled with the sharp increase in oil prices, reignited inflationary pressures, prompting investors to demand higher yields on U.S. Treasury bonds to offset the erosion of purchasing power. As a result, yields on 10-year U.S. Treasury bonds climbed close to 4.7%, while long-term bond yields surpassed the 5% level, restoring strong momentum to the U.S. debt market at the expense of gold and precious metals.
Salman stressed that rising Treasury yields and the stronger U.S. dollar currently represent the biggest pressures on gold, as investors increasingly prefer financial instruments that provide high and guaranteed returns rather than holding gold, which depends solely on price appreciation. However, he pointed out that gold still retains strong long-term support factors, most notably continued purchases by central banks worldwide, which average more than 70 tons per month, in addition to ongoing concerns about the declining purchasing power of fiat currencies globally.
He added that history confirms gold is not immune to sharp declines during periods of aggressive monetary tightening by the Federal Reserve, citing the collapse in gold prices during the 1980s under Paul Volcker’s rate-hiking cycle, as well as the steep declines witnessed in 2013 alongside the strong rally in the U.S. dollar. He explained that markets are currently repricing expectations based on a “higher for longer” interest rate scenario.
Salman also noted that the recent political agreement between Washington and Tehran may temporarily ease market anxiety, but it will not be sufficient to fundamentally shift gold’s direction, because the core issue has become what he described as “structural inflation,” driven by prolonged increases in energy costs and supply chain disruptions. This makes inflation more difficult to contain and forces the Federal Reserve to maintain a restrictive monetary policy.
He pointed out that markets are now closely watching the U.S. Personal Consumption Expenditures Index (PCE), the Federal Reserve’s preferred inflation gauge. He added that any stronger-than-expected reading could further reinforce expectations of prolonged high interest rates, limiting gold’s upside potential and putting renewed pressure on precious metals in the coming period.
Regarding silver, Salman said the white metal could witness a strong short-term rally, supported by industrial demand and speculative activity. However, he warned that silver remains highly vulnerable to profit-taking, especially if U.S. equity markets experience sharp declines or if liquidity begins exiting high-risk assets.
Salman concluded by emphasizing that investors should closely monitor U.S. Treasury yields, the dollar index, and equity market performance on a daily basis, as these factors have become the primary drivers of gold’s direction globally, outweighing temporary political developments or short-term market fluctuations.
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