As the first half of 2025 draws to a close, gold is facing selling pressure due to easing geopolitical tensions in the Middle East, which have revived global risk appetite. At the same time, silver continues to close the performance gap with gold, having tested the $36 per ounce level—a move analysts view as confirmation of a sustained upward trend.
Despite the fading “war premium” in gold prices, the ongoing decline of the U.S. dollar—whose index has fallen below the key technical support level of 98—has kept gold and silver futures trading within bullish consolidation ranges. Gold remains supported above $3,200 per ounce, while silver holds above $35.
The term “war premium” refers to a temporary increase in asset prices—especially gold and oil—caused by geopolitical tensions or the outbreak of war.
U.S. Debt Crisis Clouds Market Outlook
In Washington, Republicans are struggling to pass a sweeping tax-cut and spending bill ahead of the July 4 deadline set by President Donald Trump. The proposed legislation is expected to add about $2.4 trillion to the national debt over the next decade, raising alarms about long-term fiscal sustainability.
According to the latest data, total federal spending in May alone reached $687 billion, while revenues stood at only $371 billion, resulting in a staggering monthly deficit of $316 billion. Interest payments on the debt hit $92 billion—exceeded only by healthcare and Social Security expenditures.
Trump Slams Powell as Fed’s Independence Questioned
Market anxiety escalated after former President Donald Trump labeled Fed Chair Jerome Powell “terrible,” suggesting he may replace him before his official term ends in May 2026. Amid growing political pressure on the Federal Reserve, the U.S. dollar has fallen more than 10% since the start of the year—marking the steepest half-year drop since the 1970s.
Stagflation Fears Resurface as Hormuz Threat Rises
Despite a declared ceasefire between Israel and Iran at the start of the week, sporadic clashes continue. Iran has threatened to shut down the Strait of Hormuz—a vital passage for 25% of global oil exports and 20% of liquefied natural gas shipments.
Experts warn that any real closure of the strait could lead to a massive spike in oil prices, potentially triggering a global recession and a stock market sell-off exceeding 20%, similar to the oil shock of 1973.
The Fed Trapped Between Inflation and Recession
While the Federal Reserve has maintained its projection of two rate cuts in 2025, it raised its year-end inflation outlook to 3.1%, up from 2.5% in April—well above its 2% target.
John Williams, President of the Federal Reserve Bank of New York, said slower growth and higher prices are likely, fueled by trade tariffs and reduced immigration. Meanwhile, revised GDP figures revealed that the U.S. economy contracted more sharply than initially estimated in Q1.
Gold and Silver Regain Safe-Haven Appeal
As global confidence in fiscal sustainability erodes, gold is once again viewed as a safe-haven asset free from counterparty risk—unlike sovereign bonds, which no longer serve as reliable stores of value.
Gold and silver mining stocks are undergoing healthy corrections after strong Q2 rallies. Meanwhile, high-risk junior miners are showing strong momentum, supported by a technical breakout in Canada’s TSX Venture Index (TSX-V), which is composed of roughly 50% junior mining companies.
Although the index remains 75% below its 2007 all-time high, it has made notable gains this year. A return to the 1,113-point level seen in January 2021 would represent a 75% upside from current levels.
In today’s environment of high market volatility and elevated geopolitical and economic uncertainty, relative strength continues to favor gold, silver, and related equities—particularly high-quality junior miners. As investors hedge against inflation and mounting sovereign debt risks, capital continues to flow into assets that operate outside the traditional monetary system—led by gold.
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