Front desk support presentation, 8th July

Geopolitical and Macroeconomic Developments

• Renewed US-Iran hostilities have pressured precious metals, with gold dropping towards $4,000 and silver facing resistance above $63 (p. 10).
  • The US revoked its waiver on Iranian oil sales and struck approximately 80 targets, prompting Iranian counter-strikes in Bahrain and Kuwait and driving Brent crude up over 3% to $77 (p. 13).
  • The Strait of Hormuz remains mined, with naval forces warning of ongoing harassment from Iranian forces (p. 10).
• The US labor market presents a mixed outlook, leading to a more cautious view on interest rate hikes (p. 10).
  • June Nonfarm Payrolls rose by only 57k against an expected 113k, while the unemployment rate fell to 4.2% (p. 10).
  • The June NFIB small business survey fell for the fourth consecutive month to 100.2, with 32% of owners reporting unfilled job openings (p. 10).
  • The swaps market is pricing in a 34% chance of a US Federal Reserve rate hike in Q4 (p. 10).
• Central bankers at the ECB forum demonstrated a united front on monetary caution (p. 10).
  • ECB President Christine Lagarde and Fed's Kevin Warsh both opposed forward guidance (p. 1, p. 13).
  • Lagarde defended the recent European rate hike but avoided committing to future actions (p. 10).

Asian Gold Market and China Developments

• Hong Kong is launching a trial gold clearing program in partnership with the Shanghai Gold Exchange (SGE) to establish itself as a key Asian trading hub (p. 11).
  • The SGE approved the Hong Kong Precious Metals Central Clearing Company as an international member to facilitate gold settlements (p. 11).
  • Hong Kong is exploring a new RMB-denominated gold futures contract and plans to expand its storage and refining facilities (p. 11).
• China has raised the permissible quota for local investment in offshore Hong Kong bonds by 60%, increasing it from nearly $75Bn to $118Bn (p. 1, p. 11).
• Discrepancies persist regarding the true scale of China's official gold reserves (p. 11, p. 12).
  • The People's Bank of China (PBoC) reported June holdings of 2,346t, representing 8.8% of combined gold and FX reserves in May (p. 11).
  • Analysis of China's supply-demand balance from 2015 to 2025 reveals a cumulative surplus of 3,862t, suggesting over 3,000t of gold may be unaccounted for and held outside official PBoC vaults (p. 11, p. 12).

Precious Metals Performance and Investment Flows

• Precious metals have faced downward pressure year-to-date as of July 2026, with the Dollar Index (DXY) rising 2.7% (p. 28).
  • YTD price changes show gold down 5.0%, silver down 16.5%, palladium down 22.4%, and platinum down 24.1% (p. 28).
  • The silver-to-gold correlation remains tight at 0.88, while silver's correlation to copper is 0.77, reflecting its industrial utility (p. 28).
• Exchange Traded Products (ETPs) have seen notable outflows, particularly in gold and silver (p. 29).
  • Gold ETP holdings stood at 4,048t, down 123t from their late February peak despite a minor YTD gain of 18.7t (p. 29).
  • Silver ETPs fell by 2,468t YTD to 24,353t, representing an 11,118t net swing from 2025 (p. 29).
  • Platinum ETPs lost 16t (15%) YTD to 86.1t, while palladium holdings fell by 5t to 29.9t (p. 29).
• LBMA vault holdings for May 2026 showed gold rising by 20t (up 286t YTD), while silver holdings fell by 206t YTD (p. 32).

Supply and Demand Forecasts

• Gold supply is projected to reach 5,230t in 2026, against a total demand of 3,583t, leaving a surplus balance of 1,647t (p. 34).
• Silver industrial demand is forecast to decline to 26,593t in 2026, with total supply estimated at 33,169t (p. 35).
• Platinum is projected to shift to a physical surplus of 352k ounces in 2027, with total supply at 5,404k ounces of mine production and total demand at 6,974k ounces (p. 36).
• Palladium is forecast to achieve a physical surplus of 637k ounces in 2027, driven by a total supply of 10,393k ounces against industrial demand of 9,756k ounces (p. 37).