While the Oil price fell significantly after Iran's counterattack, which was widely seen as symbolic rather than a step towards further escalation of the conflict, the Gold price remained resilient yesterday, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

Gold can be back above the $3,400 on a permanent basis

"It only came under greater pressure this morning after US President Trump announced a ceasefire between Israel and Iran. The initial resilience of the precious metal is likely to have been due to speculation about US interest rate cuts, which was fuelled by comments from Fed Governor Michelle Bowman. Bowman would support an interest rate cut as early as next month if inflation remains contained. In both April and May, US inflation fell short of expectations, reducing the risks of it spiralling out of control."

"Bowman seems to share this assessment, pointing out that the effects of US tariffs are likely to take longer to materialise and be less severe than expected. She also assumes that the tariffs will tend to be lower than originally announced as a result of the current negotiations with US trading partners. Bowman is now the second member of the Board of Governors, alongside Christopher Waller, to have raised the possibility of an interest rate cut in July."

"This is relevant because the Board of Governors usually votes unanimously – dissenters are rather rare (although Bowman was recently one of them). A rate cut in July is only priced in at just over 20% in Fed Fund Futures, while one in September is priced in at almost 100%. A potentially earlier-than-expected US rate cut could lift Gold back above the $3,400 per troy ounce mark on a permanent basis."