Insights 
VT 
Global Bullion Trends
Gold prices increased by over 1% with the US Dollar weakening after two days of gains, impacted by lower US yields. Market volatility due to geopolitical tensions supported Bullion prices, trading at $3,338. The US stock markets experienced declines amid anticipation of US-China discussions in Switzerland, causing caution due to the ongoing trade conflict.
US President Donald Trump mentioned an “80% Tariff on China” on social media. Rising tensions between India and Pakistan also contributed to high Bullion prices. The US Dollar Index fell by 0.32% to 100.31, aiding gold.
Several Federal Reserve officials highlighted economic uncertainty and risks tied to trade policy, noting that US tariffs complicate the central bank’s balancing of their dual mandate goals. Treasury bond yields rose, with the 10-year note yield at 4.371%, while US real yields stayed at 2.81%.
The World Gold Council reported that China added 2 tonnes of Gold to its reserves for the sixth straight month, while Poland added 12 tonnes. Swap markets anticipate the Fed’s rate cut by 25 basis points in July, with two more expected later in the year.
Technically, Gold price remains above $3,300, with signs of buying momentum, as indicated by the RSI. A daily close below $3,300 could bring into play the low of $3,202 from earlier in May.
Central banks are significant holders of Gold, with major purchases in 2022 by countries such as China, India, and Turkey. Gold has an inverse relationship with the US Dollar and US Treasuries. The asset often strengthens when the Dollar weakens and is considered secure during financial turmoil. Geopolitical instability and fears of a recession can boost Gold prices owing to its status as a safe-haven asset.
What we’ve seen over these past trading sessions is a textbook narrative: geopolitical unease spikes, yields pull back slightly, and gold—the asset traders often turn to when things feel shaky—catches a bid. The latest bounce in the metal, pushing firmly above the $3,300 mark, was supported by a slip in the US Dollar, which had been climbing for two straight days until a shift in risk sentiment took hold.
Shifting Global Dynamics
Looking at the broader picture, several moving parts continue to exert pressure. Tensions between the US and China have resurfaced, with sharp messages from Washington providing fresh cause for global risk aversion. When there’s even the suggestion of fresh tariffs or economic confrontation, there’s usually a reaction across asset classes, and this week has been no different. While markets await upcoming discussions in Switzerland with some apprehension, the trading pattern shows positions skewing defensively, avoiding any bold calls on policy or growth-sensitive assets.
In the background, South Asian friction added further weight to the safe-haven flow, reinforcing momentum in precious metals. These aren’t new drivers—but they do keep volatility from falling too low. And that provides opportunity.
Fed officials, speaking publicly, underlined the difficulty of managing dual policy goals amid policy shocks. The presence of tariffs—actual or threatened—seems to muddy forecasting, not just for inflation, but also employment and capital flows. From our view, their remarks suggested there’s more caution behind the scenes than perhaps headline data would imply. Rate expectations, as priced via swaps, lean decisively towards easing over the next few meetings, with a move in July almost fully priced.
Bond yields offered an interesting contrast—increasing slightly on the surface, although real rates held steady. That stability in real yields, around 2.8%, keeps the cost of carry contained for non-yielding assets like gold. As long as inflation expectations stay reasonable and nominal yields don’t spike, there’s fundamental support for the current pricing structure. Real yields remain the more sensitive anchor for gold valuation than breakevens or nominal moves alone.
On the central bank front, the steady build-up of gold reserves by official institutions—especially from large emerging economies—underscores the broader shift we’ve observed for several years. Buyers like Warsaw and Beijing appear to be making deliberate moves to diversify away from Dollar reserves. This isn’t a new trend, but it still matters to directional flows. When central banks increase strategic holdings, they often do it gradually but consistently, which adds a persistent underlying bid.
Technically, the market held the $3,300 level, which suggests that the recent pullback has been absorbed well. Momentum metrics like the RSI indicate there’s continued appetite to buy dips, at least while downside levels such as $3,202 hold. Should there be a daily break below that key level, it would likely attract follow-through selling—but until then, the resilience speaks clearly.
It’s also worth noting that although gold has a well-documented negative correlation with the Dollar and Treasuries, correlations aren’t fixed. Over shorter horizons, we could well find that gold trades on its own rhythm, especially when geopolitical catalysts drive human behaviour more than Excel models. In recent days, that’s been quite clear.
As we look ahead, market participants navigating derivatives tied to precious metals may find short-term direction dictated by multiple overlapping signals. While technical levels provide guideposts, developments in global diplomacy or even an unexpected data release from the US or China could change pricing dynamics swiftly.
With real yields providing a stable framework, external shocks ever-present, and central banks delivering a steady bid, the range appears well supported for now—but positioning should remain flexible in case the next headline throws us into a new cycle.
