The past six weeks have seen the gold (GCQ25) market trading in a sideways and choppy fashion at price levels not far below the record high of $3,485.60 scored in late April, basis nearby Comex futures (GCM25). The near-term and longer-term technical postures for the gold market remain overall bullish.
Gold Bulls Have Run out of Gas
However, the yellow metal bulls do appear to be tired amid a very mature bull market run that dates to late 2015, when prices started to trend up from a low of $1,046 an ounce.
Importantly, the fact that recent conflict between Israel and Iran that that involved major U.S. military airstrikes did not push gold prices to a new record high suggests that all the known bullish fundamentals in the gold and silver markets have already been factored into prices.
Those known bullish fundamentals include increased buying from central banks around the world, a depreciating U.S. dollar on the foreign exchange markets, the potentially destabilizing impact on the global economy from tariffs, and better retail demand from Chinese and Indian consumers.
Gold Bulls Need a New Spark
In other words, the gold and silver markets are very likely going to need a major, fresh fundamental event to push the precious metals prices to new highs. That fundamental event could be a new and unexpected geopolitical development. Such could come from a renewed, major flare-up in the Middle East, or in the Russia-Ukraine war, or a serious deterioration in ongoing but presently languishing negotiations to improve global trade relations — namely between the U.S. and China.
The global trade situation had been pushed to the back burner over the past few weeks, amid the Israel-Iran military conflict. However, it’s likely world trade relations and this year’s new tariffs will become much more sensitive in the coming weeks. Many economists and analysts are reckoning it will be very difficult and time-consuming to unwind this year’s implemented tariffs, let alone come to agreement on the future path of global trade.
Said David Morrison of Trade Nation in a Wednesday morning email dispatch: “It’s worth remembering that China-U.S. trade issues remain unresolved. Chinese Premier Li Qiang struck a cautionary tone overnight, urging global leaders not to let trade disputes become overly politicized. The remark underlined the fact that while the Israel-Iran hostilities and subsequent ceasefire have pulled the focus somewhat, other sources of tension continue to tick along under the surface, for now.”
The most likely bullish spark to reignite the gold and silver markets rallies is a further deterioration of global trade negotiations, and especially between the China and the U.S.
BRICS Is in the Mix
The other element that could push gold and silver prices to new highs would be the upcoming BRICS meeting between Brazil, Russia, India, China, and South Africa.
These countries are all aiming to undermine the U.S. dollar’s strength and reserve status around the globe. Part of this plan involves BRICS countries securing more gold reserves. An announced, concerted effort at such could give the gold market a solid boost, including possibly to a new high.
The BRICS summit will take place in Rio de Janeiro on July 6-7. BRICS was established in 2009 as a counterbalance to the Group of Seven. In 2024 the bloc expanded by adding Iran, Egypt, Ethiopia, and the United Arab Emirates. The early July BRICS meeting will be closely monitored by the general marketplace, but especially by currency traders.
On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
