Gold prices in Malaysia dropped on Friday. The price per gram decreased to 459.22 Malaysian Ringgits from 461.51 the day before. The price for a tola also fell to MYR 5,356.28, while a troy ounce was priced at 14,282.97 MYR. In Malaysia, gold prices are determined by adjusting international rates and converting them into the local currency and units. Prices change daily based on market trends, although local rates may vary slightly.

Central Bank Gold Reserves

Central banks hold most of the world’s gold. In 2022, they bought 1,136 tonnes, worth about $70 billion, making it the largest annual purchase on record. Countries like China, India, and Turkey are rapidly increasing their gold reserves. Gold usually moves in the opposite direction of the US Dollar; when the Dollar weakens, gold prices tend to rise. Prices can change due to geopolitical issues or economic concerns. Generally, lower interest rates boost gold prices, while a strong Dollar can keep them in check. Recently, we saw a slight dip in Malaysian gold prices. The value per gram fell to 459.22 MYR, down over 2 Ringgits from the last session. Prices for tola and troy ounce formats also showed similar declines. This isn’t an isolated drop; it’s a local adjustment reflecting changes in global prices, currency conversions, and rounding in domestic rates. This suggests that local gold prices are closely following global trends rather than setting their own path. These trends become particularly important during times of macroeconomic uncertainty. The key issue is global reserves. Central banks from countries like China, India, and Turkey aren’t just making small adjustments—they’re significantly increasing their gold holdings. Last year, they acquired over 1,100 tonnes. This represents billions in USD at current prices. When central banks adjust their reserves, it’s usually a long-term strategy that aims to protect against currency fluctuations or support economic confidence during tight financial conditions.

Gold And The US Dollar

Gold and the US Dollar have a long-standing inverse relationship. When the Dollar weakens, gold prices often rise. However, it’s important not to oversimplify this relationship. If the Dollar remains strong, it can limit gold’s upward movement. Additionally, in times of increased risk appetite, investors may shift funds from safe havens like gold to stocks or other higher-yield investments. Geopolitical or economic fears can also impact gold prices, sometimes in ways not directly related to inflation or interest rates. Price spikes can occur due to market sentiment rather than hard data, especially during times of conflict or when major economic policies change. Currently, we should pay attention to interest rate expectations from the Fed. Lower interest rates can support gold prices since it reduces the opportunity cost of holding non-earning assets. However, if inflation remains stable or increases in the US or Western Europe, the Dollar can still strengthen, which would put pressure on gold prices even if rates are lower. For those trading metals like gold, it’s essential to monitor central bank announcements, inflation data, and changes in emerging market policies. These factors can significantly influence market direction. Often, markets misprice future probabilities, leading to unexpected changes in futures contracts when guidance shifts or data surprises. As we look ahead, flexibility in hedging strategies is crucial. Relying solely on interest rate predictions for gold trading is no longer effective. It’s important to consider the relative strength of the Dollar, the pace of reserve buying, and current political statements. We must acknowledge that gold is highly sensitive—not just to central bank actions but also to traders’ perceptions about timing. Create your live VT Markets account and start trading now.

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The Bank of Japan’s minutes from their May meeting will be available at 2350 GMT (1950 US Eastern time). A preview is already available based on the Summary of Opinions from the Monetary Policy Meeting held on April 30 and May 1, 2025. Bank of Japan Governor Kazuo Ueda will address the Annual Trust Association Meeting, though the exact time of his speech is not yet confirmed. In May 2025, Japan’s Consumer Price Index (CPI) stayed above the Bank of Japan’s target rate, continuing the central bank’s ongoing evaluations. The summary from the late-April and early-May meetings gives some hints about the tone of the full minutes. These excerpts indicate a persistent inflation above the desired target. Although the central bank has made only gradual changes so far, there’s a growing belief that monetary support might need to decrease sooner than expected. Governor Ueda’s upcoming speech may echo these concerns, especially given the steady CPI readings. Since inflation isn’t decreasing, it suggests that policies could become stricter, either soon or in the coming quarters. There’s also worry about waiting too long to make changes. Traders should pay close attention to Ueda’s words, as they often reveal more than official statements. For short-term traders focusing on interest rate products and volatility linked to JPY-denominated assets, the focus should shift to the yield curve’s predictions for potential changes, not just the policy rate. There’s clear evidence of internal disagreements within the central bank. Some members are more vocal about ongoing inflation and currency weakness pushing prices up. This could lead to increased volatility following each new CPI report or economic forecast. We should monitor the implied volatility in options for Japanese government bonds, especially as it might increase around key announcements from the monetary authorities. Even if no rate change happens at the next meeting, clearer forward guidance could lead swap markets to widen expectations, affecting cash bond yields and forward contracts. Traders should consider two key questions: what happens if the yen weakens further? What actions would lead to a sharper domestic tightening? These signals are increasingly relevant now. The output gap has narrowed, labor markets are tight, and higher import costs are being passed on to consumers. Conditions that would not have prompted policy changes a year ago are now different. Members like Nakagawa are voicing concerns that inflation may not just be temporary, especially as energy costs continue to rise. As a result, carry trades involving Japanese government bonds (JGBs) may now be priced too optimistically. Our models indicate a slight increase in market-based inflation expectations. While not alarming, this suggests a need to rethink any short-term holdings relying on long-term dovish policies. Upcoming option expirations should be evaluated accordingly, especially where gamma exposure is sensitive to sudden changes. Overall, there’s a trend: comments from the monetary board are becoming less patient. While not overtly hawkish, they are not neutral either. Japan’s usually flat interest rate structure may soon begin to rise again if policy changes accelerate. Repricing will be inconsistent, but for those in swaps, futures, or leveraged bond ETFs, timing the sentiment shift could be more crucial than just predicting direction. We believe that hedging strategies will need quick adjustments in the next few weeks. Keep an eye on changes not only in headline CPI but also in core readings that exclude fresh food and energy. These core figures will increasingly influence policy decisions from the board’s key members. A careful analysis of the next minutes will be crucial to understanding when—and not if—the next policy change will occur.

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Silver has seen strong selling pressure for three days in a row, bringing prices down to around $35.65, a level not seen in over a week during the Asian trading session. This decline follows a drop from a high not reached since February 2012. From a technical standpoint, silver’s drop below $37.00 and the 23.6% Fibonacci retracement level suggests a bearish trend. The oscillators on the 4-hour chart show negative momentum, indicating the possibility of further declines. If the price breaks decisively below the mid-$35.00 range or the 100-period simple moving average (SMA) on the 4-hour chart, we could see deeper losses. If the downward trend continues, silver might reach the 38.2% Fibonacci level around $35.15, potentially moving down to the psychological level of $35.00. Additional support is found at $34.75, with a further drop to the 50% retracement level at $34.45 signaling more downturn. If silver attempts to recover above $36.00, it may face resistance in the $36.40 to $36.50 range. A sustained breakthrough could shift momentum towards bullish traders, targeting $37.00 and higher. Silver’s price is affected by geopolitical tensions and the behavior of the US Dollar, with changes in industrial demand also influencing costs. The market’s reaction to technical levels and external factors will shape silver’s future direction. Currently, silver’s prices are hovering at the lower end of their recent range, with ongoing pressure felt over several sessions. The drop from multi-year highs has gained attention and has broken through both technical and psychological support levels, such as the 23.6% Fibonacci retracement. This pattern suggests that a reversal is not likely yet; instead, the trend seems to continue downward. On the charts, momentum oscillators on shorter timeframes like the 4-hour show a clear bearish trend. Since falling below $37.00, bears have regained control, evidenced by a downward bias in price action and a lack of support from demand. The recent movement below the 100-period simple moving average suggests trouble ahead; this average often serves as a key reference for mid-range traders. Remaining below this level opens the possibility of testing the $35.15 mark, and potentially lower levels at $34.75 or $34.45 if selling pressure persists. These levels are not picked randomly; they align with key retracement zones from previous rallies where price has often paused or reversed. If we revisit these levels, it would indicate more than just daily fluctuations; it would suggest a change in market sentiment that has been riding high since early May. We’re also closely watching the $36.00 level. This price point has repeatedly indicated whether stabilization attempts gain traction or fail quickly. A bounce above may only be short-covering unless the price convincingly holds above $36.50. Short-term traders may see a recovery opportunity, but without consistent buying support, we should approach any rebounds cautiously. A significant shift toward the upside cannot be expected until $37.00 is breached with volume and follow-through. It’s important to remember that silver doesn’t trade in isolation. As an industrial material and a quasi-monetary asset, it reacts in complex ways. Currently, external factors, especially geopolitical stress and changes in dollar flows, are affecting how charts behave. A stronger US Dollar puts pressure on silver, while cooling tensions can reduce safe-haven demand. Traders need to consider these external macro cues alongside technical indicators that may signal changes. As market positions adjust, we are monitoring how support and resistance levels hold up. The inability of silver to maintain February 2012 levels is significant; it shows potential overextension rather than underlying strength. Unless the broader context changes, we anticipate further tests of support, especially as sellers remain active for now.

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The USD/CHF pair fell to about 1.3690 during Friday’s Asian trading session. Concerns about the US getting involved in the Middle East conflict have strengthened the Swiss Franc, leading to this drop after a three-day increase. The conflict has now lasted for seven days, and uncertainty rises with potential US involvement in the Israel-Iran war. Recently, the Swiss National Bank (SNB) lowered its interest rate by 25 basis points to zero, hinting that negative rates could return in the future. Consequently, the Swiss Franc has gained strength against the US dollar. In contrast, the US Federal Reserve kept its key borrowing rate steady but indicated possible rate easing due to trade tensions.

Importance Of The Swiss Franc

The Swiss Franc is valued as a safe haven currency, thanks to Switzerland’s stable economy and neutral politics. The SNB’s decisions greatly influence the Franc’s value, with interest rates playing a vital role. Economic data from Switzerland, its relationship with the Eurozone, and global market sentiment are crucial in determining the currency’s strength. The Swiss Franc often moves similarly to the Euro due to close economic ties with the Eurozone. This situation represents a significant shift in foreign exchange sentiment, largely influenced by external factors rather than domestic ones. The drop in the USD/CHF pair to around 1.3690 is a response to rising geopolitical risks. The prospect of increased US involvement in conflicts involving Iran and Israel has unsettled markets, prompting investors to seek stability in safer assets like the Franc. This sudden shift explains the upward move in the Franc. The SNB, led by Jordan’s team, surprised the market with a 25 basis point cut to zero. While some easing was expected, the sharpness of this decision and its communication indicated the SNB’s readiness to accept or even encourage further strength in the Franc, if it supports overall monetary conditions. This is significant as inflation remains manageable, allowing the bank to act without risking rapid price growth. However, it raises concerns about potentially returning to negative rates, signaling that demand for safe havens is the main driver currently, rather than interest rate differences. On the other hand, Powell and his colleagues have maintained a more static stance. Although they kept rates steady, they hinted at possible easing in the future to balance trade pressures from tariffs and retaliation. This cautious approach suggests that the Fed sees global risks rising and prefers to keep options open.

Risk Sentiment And The USD/CHF Pair

For traders focused on interest rate differences, conditions have become less favorable. With the SNB taking more decisive action and the Fed being more cautious, we may need to accept that interest rate divergence may not be the primary driver for this pair in the short term. Instead, we should closely monitor global developments, especially those outside economic factors. The Swiss Franc has shown that it can gain strength without policy support. Investors look for reliability when narratives become unstable, which has been a hallmark of the Franc for decades. Its connection to the Euro adds complexity due to its ties with Germany and France, although the Franc tends to act independently under fear. Even with a relatively dovish SNB stance, the Franc can appreciate when demand for safe havens rises. Currently, the currency pair’s movement may depend more on the strength or weakness of the USD than on domestic factors. Economic indicators like real rates and CPI may become less significant if geopolitical risks continue. From our standpoint, short-term strategies should focus on response rather than prediction. Risk sentiment is more important than policy biases. The technical level around 1.3700 has already been tested. If it holds, counter-trend movements may be limited. However, if geopolitical tensions escalate, further CHF appreciation is possible, regardless of the SNB’s intentions. Keep an eye on event risks, especially those beyond economic calendars. Structured derivative positions should reduce reliance on interest rate predictions alone. Create your live VT Markets account and start trading now.

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The Bank of England decided to keep interest rates steady with a 6-3 vote. This was surprising because many expected a wider 7-2 vote. Three members wanted to lower rates by 25 basis points, showing a difference in opinions within the committee. Analysts believe the Bank’s decision probably won’t greatly affect the pound. Instead, larger global issues, like geopolitical tensions, are playing a more significant role in currency values. One major concern is the potential for the U.S. to take military action against Iran. This could cause the dollar to move more than the Bank of England’s decision affects the pound. The Bank is trying to balance its internal situation with external pressures. With a closer-than-expected vote to hold rates steady and some members pushing for a cut, it’s clear that opinions on easing differ within the committee. The fact that more members support a cut introduces uncertainty about future meetings. Market expectations were leaning towards a smoother consensus to maintain rates without such disagreements. Now, with this surprising vote, attention shifts to the implications for the future—market participants will be looking for signals before the next meeting. Currently, the situation seems to be changing. The recent calls for rate cuts can’t be ignored as just symbolic. These calls often start as outliers and build momentum over time. The upcoming inflation and growth data in the next few weeks will be crucial. If the data is weaker than expected, the majority might lean towards easing. However, the currency markets showed little reaction to the decision. This was not surprising, as the decision to hold rates did not distract from larger global pressures. Ongoing unrest in the Middle East and concerns about U.S. military involvement have drawn market attention to safe-haven assets and energy prices instead. We are in a situation where larger events are overshadowing short-term monetary decisions. Even a bold move by policymakers might not shift broader expectations. The pound’s stability after the decision suggests this. The limited effect of the vote on implied volatility for sterling shows that investors are being cautious and not reacting strongly to domestic news. Given this context, the upcoming days will require careful planning. When domestic data comes in, especially labor market figures and services PMIs, we should analyze not just the main figures but also if they support those advocating for easing. If the numbers disappoint or if past data is revised downward, more members may join the call for cuts. As we prepare for this data, monitoring implied rate paths and short-duration swaps will be increasingly helpful. These indicators will reflect any repositioning before it affects overall yields. We are already seeing a slight reduction in expectations for interest rate hikes this summer, which may change quickly. In this environment, the focus shifts from each piece of news to how quickly the data aligns with those calling for earlier action. Whatever opportunities arise each day, being adaptable between data releases will help respond to the evolving messages from decision-makers.

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New Zealand’s financial markets are closed today, Friday, June 20, 2025. This is because of a public holiday, resulting in a long weekend in New Zealand. As a result, trading activity in the kiwi dollar will likely be even more limited than usual. The kiwi dollar usually has low liquidity, and today will see even less movement.

Impact On Liquidity

With New Zealand markets closed, liquidity for NZD pairs will be restricted. This is likely to widen bid-ask spreads and reduce the chances of sharp price movements. When trading volume is low, even small orders can cause erratic price changes. However, these changes often don’t lead to lasting trends—any momentum gained on low volume tends to fade quickly when more traders return. We have seen this pattern before during regional holidays, particularly on Fridays. Investors usually decrease their positions or hedge their bets earlier in the week. By the time the holiday arrives, most have already adjusted their trading strategies. Therefore, today is less about initiating movement and more about watching for fluctuations. Meanwhile, derivative traders managing positions across different currencies might notice minor inefficiencies in cross rates. The kiwi dollar, which is linked to overall market sentiment and commodity prices, can still be affected by external events—especially U.S. economic data or unexpected news. If any significant news breaks today, the thinner market could exaggerate reactions beyond what the fundamentals would suggest. Thompson anticipated a quiet market by midweek, noting a steady decline in trading volume from Tuesday onward. This prediction has proven accurate, and momentum traders are mostly inactive. Any price action today will likely be driven by algorithms rather than by strong trends.

Positioning Shifts

In terms of volatility pricing, short-term implied volatility has been marked down, indicating expected calm—but that adjustment has mostly reached its limit. For those monitoring gamma exposure, today’s session is better suited for recalibrating rather than starting new positions, unless there’s a need for hedging in the short term. New trades made today might face time decay without enough market activity to drive movement. Some subtle changes are occurring in positioning further out on the curve. Gupta mentioned earlier this week that there has been renewed interest in options expiring in mid-August, possibly indicating preparation for upcoming central bank announcements. These changes are small, but they show that option traders are looking further into the future for their decisions—not just focusing on today’s market. It’s also important to note that interbank dealers have tightened their pricing bands slightly overnight, likely in anticipation of manual management of currency pairs during this quiet time. For both retail and institutional traders, any new positions taken today should be carefully considered due to wider spreads and potential slippage. Waiting for better liquidity may lead to more favorable outcomes. In practical terms, the Friday closure alters global FX liquidity throughout the session. Its impact is most pronounced during New Zealand and Australian morning sessions but may slightly influence early London trading unless offset by strong catalysts from other regions. We will be monitoring this closely. Create your live VT Markets account and start trading now.

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New Zealand’s GDP grew by 0.8% in the first quarter compared to the previous quarter. This growth is slightly better than the 0.7% forecast and the Reserve Bank of New Zealand’s 0.4% estimate. The rise comes mainly from the services and manufacturing sectors, while construction has stabilized after prior declines. This marks the second straight quarter of economic growth. However, despite the positive news, the economy faces challenges. Annual per capita GDP continues to decline. Factors such as tariffs, a slowdown in consumer spending, and global volatility are making the outlook tough.

Detailed GDP Growth

Looking closely at GDP growth, we see business services gaining strength and a stable performance in manufacturing and construction. That said, new indicators suggest that economic activity may have reached its peak, raising concerns about potential stagflation. The Reserve Bank of New Zealand is expected to keep interest rates steady in July, with a possible cut in August that would lower the Official Cash Rate to 3%. Although the GDP growth offers some relief, rising oil prices from geopolitical issues may lead to higher inflation, which would complicate future monetary policy. Current data presents a mixed economic picture. The quarterly GDP increase of 0.8% surpasses both market predictions and the central bank’s earlier estimates, which is significant. The services and manufacturing sectors have primarily driven this growth, coupled with recovery in construction. It’s the second quarter of growth, which could look promising on its own. However, when we consider population growth, the situation becomes less bright. Per capita GDP still shows a declining trend, indicating that while the economy may be growing, the average individual or business isn’t seeing that same improvement. This is crucial to monitor since it explains why overall demand might still be weak, despite the headline growth. Global risks remain a concern. Tariffs abroad and slowing domestic consumer activity are continuing challenges. These are not just temporary issues; they signal that demand might not support significant growth. It’s less about past performance and more about sustaining momentum going forward. Caution is likely to prevail in the coming days.

Monetary Policy Considerations

The recent improvement is mainly due to growth in business services, which reflects future business confidence and corporate investment. If this trend continues, it may provide a stable base for economic activity in the near term. However, manufacturing and construction are steady but not accelerating. Worries arise from signs that activity may have peaked. Recent consumption indicators, activity surveys, and retail data show a cooling trend. This pattern raises concerns about policy lag and the possibility of prolonged stagnation, driven by rising import costs rather than domestic demand. Oil markets are also fluctuating again. Geopolitical tensions are driving prices higher, resulting in increased costs for businesses. This indirectly influences inflation expectations, which the central bank must address carefully. Their target band offers little leeway to ignore the secondary effects of rising energy prices. Right now, monetary policy decisions are expected to hold steady in July. Many predict a possible rate cut in August, reducing the cash rate to 3%, which would help ease pressure on sensitive sectors. However, this expected trend is not guaranteed. Rising energy prices or unexpected wage changes could disrupt this plan. From a trading perspective, the time for focusing on terminal rates has shifted. The emphasis should now be on the trajectory rather than the peak—specifically, how quickly expectations for easing change in response to future inflation signals. The next Consumer Price Index (CPI) and labor market data will likely influence yields and increase volatility in rate-linked structures—this is where opportunity and risk may arise. While growth isn’t declining, it isn’t fast either. Think of it as a steady pace—functional but vulnerable to setbacks. In this context, long gamma positioning is more sensible than making firm directional bets. Market participants should focus on how forward curves are valued over the next 3–6 months, rather than just on immediate meetings, as the narrative can shift without clear warning. Having options that don’t rely too heavily on a single economic perspective will be beneficial. Create your live VT Markets account and start trading now.

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Russia’s Deputy Prime Minister Alexander Novak highlighted the importance of moving forward with OPEC+ plans to boost oil production. He pointed out that summer demand justifies bringing some of the 2023 voluntary cuts back into the market to balance supply. Eight OPEC+ members, including Saudi Arabia and Russia, are set to end cuts of 2.2 million barrels per day (bpd) from April to July. While Russia initially suggested pausing the increase for July, they ultimately agreed to a boost of 411,000 bpd. Regarding tensions in the Middle East, Novak recommended that OPEC+ stick to its current course to prevent market instability caused by speculation. Saudi Energy Minister Prince Abdulaziz echoed this approach, stating that the group would concentrate on real supply disruptions instead of speculative concerns. This plan is a careful and staged reduction of previous supply limits by major oil producers. Novak, as a key spokesperson for the group, confirmed they are now shifting towards a slightly more open supply strategy due to what they consider a strong seasonal rise in global demand. These output increases are not random; several members, like Riyadh and Moscow, are coordinating them in stages, aiming to align more smoothly with current consumption patterns. The planned 2.2 million bpd increase over four months follows a period of reduced output to stabilize falling prices. Although there was some initial hesitation from Moscow regarding the July increase, the agreement on the extra 411,000 barrels suggests a broader consensus has formed. In times of geopolitical tension, especially with nations in the Gulf region, it’s common for reactions to be hasty before the impact on supply can be fully understood. However, this group is resisting that impulse; their thinking is structured and deliberate. Abdulaziz’s message was clear—no sudden changes based on fear or assumptions. They won’t adjust supplies unless there are tangible logistical issues. So, what does this mean for us? This creates a clear pace for output levels—measured, transparent, and spaced out to reduce uncertainty about supply. For those looking into contracts in the coming weeks, particularly in energy-linked derivatives, this establishes a solid baseline. In simple terms, it lessens the chances of erratic shifts caused by uncertainty among producers. With this framework in place, market reactions can rely more on factual economic data and actual supply flows. Pricing models should adapt to this change. The risk of unexpected OPEC+ interventions seems lower in the near term. Focus can now shift back to demand indicators and global supply developments. The sudden price premiums previously anticipated for producer moves might now seem unwarranted, and positions could be adjusted accordingly. It’s reasonable to start modeling more stable price structures for the summer. We should also consider how this clarity affects overall market sentiment. Markets benefit from predictability, and with major players setting volume forecasts proactively, there’s less temptation for emotional pricing. Unless there are unforeseen disruptions in shipping or production, there’s a reliable framework to follow each week. As a result, oil volatility product open interest may weaken slightly, as the perceived chances of unexpected supply events decrease. We see a stronger case now for using medium-term strategies in stable range setups, or even calibrated diagonal spreads, rather than aggressive bets that rely too heavily on production headlines. That excitement has cooled—for now. What we should monitor now is whether these production capacity changes keep pace with the seasonal uptick in buying. If production ramps up too quickly and demand doesn’t match, it could lead to an inherent cap on prices. The July figures will be critical—not just milestones but indicators of whether the group successfully balanced supply or risked mild oversupply. Sharp changes in those figures could add value to relative spread moves, especially in crack or calendar differentials. If anything deviates from this plan—such as a stall in capacity increases—we would expect to see a swift shift in volatility expectations and possibly a change in inventory premium responses in future pricing. For now, though, the sequence they’ve laid out provides clarity and reduces our exposure to uncertainties.

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Silver (XAG/USD) is facing a downturn for the second consecutive day, pulling back from a multi-year high of $37.32. This drop is mainly due to profit-taking after the Federal Reserve decided to pause interest rate hikes. The Fed’s choice to keep rates steady, while hinting that borrowing costs could stay high, provided some support for the US Dollar, which slightly impacted precious metals. Currently, Silver is trading down about 1.10%, sitting around $36.35. This decline follows a strong rally fueled by supply constraints, safe-haven demand, and a weaker US Dollar. Geopolitical issues, particularly tensions between Israel and Iran, have kept interest in Silver and Gold as safe investments. Silver has strong industrial demand, especially for solar panels and electric vehicles, contributing to a global market deficit for five years. Reports show a projected supply shortfall of over 110 million ounces by 2025, which supports price stability. Technically, Silver’s trend remains bullish, but momentum is slowing down. A bearish divergence is seen on the daily chart between the price and the RSI, hinting at a possible short-term correction. Support is anticipated around $35.30–$35.50, and a deeper pullback may reach $34.50. If Silver rallies above $36.50, it may retest $37.30 and potentially move towards $38.00. While Silver has seen significant gains recently, partly driven by ongoing shortages and the search for safe assets, the current pullback suggests caution. After retreating from $37.32, which hasn’t been seen in over ten years, the Fed’s pause has shifted focus back to real rates and the strength of the dollar. With Powell emphasizing a careful approach to future cuts, stabilization in yields has allowed the US Dollar to gain strength, nudging precious metals lower. Now trading near $36.35, this 1.10% dip isn’t particularly deep, but the daily chart indicates that momentum may be cooling. The divergence between price movement and the RSI should not be overlooked. While divergences can indicate corrections, they do not guarantee reversals. This suggests that the current strength in Silver may be temporarily overextended. A further dip below the $35.30–$35.50 range could lead to a decline towards the mid-April level around $34.50, which previously saw significant interest and may act as a support level. Medium-term fundamentals remain positive, as there is consistent demand driven by industrial applications—especially with solar panels showing robust growth. However, traders should approach near-term activities cautiously, especially since speculative positioning has recently become elevated. The expected supply deficit of over 110 million ounces by 2025 highlights that long-term supply won’t change quickly, but deficits alone don’t dictate daily prices. If Silver manages to rise above $36.50 with renewed momentum, the previous high of $37.30 will be the next target. The $38.00 mark, not touched in over 11 years, could come into play quickly, especially if macro conditions remain supportive, like renewed geopolitical tensions or a decline in the dollar. Until then, it’s wise to exercise caution near resistance. Using trailing stops for existing long positions may benefit those with earlier entries. Waiting for confirmation above previous highs instead of trying to predict bottoming patterns amid intraday fluctuations will provide clearer insights. We are not in a topping environment, but it’s also not a time for fresh breakouts. Let technical signals guide decisions in this uncertain landscape.

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J.P. Morgan warns that if tensions rise leading to the closure of the Strait of Hormuz, oil prices could soar to between $120 and $130 per barrel. Goldman Sachs notes a $10 per barrel increase in prices due to geopolitical risks. According to Barclays, if Iranian oil exports are cut in half, prices could reach $85, possibly surpassing $100 if a wider regional conflict arises.

Short-Term Fragility and Market Adjustments

The earlier sections illustrate a mix of short-term vulnerability and the oil market’s ability to adjust. Prices are being affected not only by fears of supply issues but also by expectations of potential disruptions, which are mostly speculative. The recent rise in Brent crude prices is linked more to perceived potential losses than to actual output decreases. The prospect of losing a few hundred thousand barrels is low compared to historical figures, but it matters because of the origin of that oil and the difficulty in finding replacements. It’s important to note that most of Iran’s output continues to flow, despite sanctions, through less visible means. Any change to this situation wouldn’t go unnoticed. Some analysts believe that exports may already be reducing due to pressure, which lowers the chances of a significant shock ahead. Others remain cautious, predicting further losses if tensions escalate. The actual impact will depend on how long the interruptions last. A short delay of a few weeks might raise prices temporarily while keeping the overall market stable. In contrast, a prolonged halt would completely change the situation. Additionally, physical barriers like blockages at the Strait of Hormuz typically do not last indefinitely. History shows that chokepoints can often be circumvented or reopened under pressure. Traders can take comfort in knowing that major producers generally respond to rising prices by drawing on reserves or increasing output. However, the speed of their response is crucial; any delay can create risks or opportunities based on market positioning.

The Role of Managed Money and Market Reactions

We believe that if disruptions last for months instead of weeks, the market will not wait for confirmation—it will react immediately. There’s little time for hesitation in such scenarios. Monitoring time spreads between nearby and deferred contracts can be helpful. Wider gaps signal increasing supply concerns and can become more volatile during geopolitical tensions. Under these conditions, price fluctuations become more constant rather than sporadic. It’s not only about price levels but also how resilient prices are when faced with varying news. Not all scenarios of disruption are priced similarly. Decreases in Iranian supply can have different effects depending on whether OPEC intervenes or if importers can quickly find other sources. Changes in demand from Asia, particularly China, can lessen the impact of supply cuts. However, this assumes there are no spillover effects from neighboring countries with higher production and transit activities. If risks spread geographically, the pricing implications also expand, which is why some estimates reach the $120–$130 range. A key factor today is how much of the current premium is connected to risk appetite. When expectations vary greatly, price movements reflect market positioning, not just fundamentals. Therefore, it’s important to pay attention not only to news headlines but also to how the markets react. If prices increase on known information, it suggests an imbalance in trading. Conversely, if prices drop despite new risks, it may indicate market fatigue. Eventually, optionality becomes crucial. Weekly option flows, changes in open interest, and the shape of the implied curve can hint at market fears and timelines. Past tensions have shown that certain expiration dates draw large trading volumes, either protecting or betting on specific disruption periods. This behavior often leads to significant intraday price shifts as hedges are established or dissolved rapidly. Don’t overlook the influence of managed money—positions held by funds frequently change ahead of clarity, as trading models trigger rebalancing or stop-losses get hit. These actions can create temporary market distortions that amplify price movements. Keeping a close eye on these flows helps anticipate moments when the market could move in one direction, especially on lighter trading days. In summary, while short-term oil pricing may not fully depend on actual lost volumes right now, the weeks ahead will hinge more on news interpretation, the timing of hedging actions, and changes in market positioning than on the amount of oil available. The market is alert and can overreact, and this may create opportunities. Create your live VT Markets account and start trading now.

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