NFP Stronger, #Gold & #Silver Lower — Weekly Recap

More of the same this week: Iran-driven headlines continue to dominate the precious metals market, while a stronger-than-expected NFP report pushed gold below its 200-day moving average.

Reuters reported that following today's payroll data, fed funds futures are now pricing in a meaningful chance of at least one rate hike before year-end. Just a few weeks ago, the market was debating rate cuts versus no change. The combination of a stronger U.S. dollar, higher rate expectations, and ongoing geopolitical uncertainty has weighed on an already vulnerable gold market. The U.S./Iran crisis has now persisted far longer than most expected, creating uncertainty across global markets. Gold finally broke below its 200-day moving average near $4,435, while positioning continues to be reduced across both CME futures and ETFs. Gold open interest is approximately 40,000 contracts lower than it was one month ago.

The attached WatchGold.org 1-month Gold vs. DXY chart clearly highlights the inverse relationship between a strengthening U.S. dollar and a weaker gold price.

Volatility has also continued to decline. At-the-money 1-month implied volatility is now just under 20% for gold and approximately 40.5% for silver, both significantly lower than a month ago. Combined with the substantial reduction in futures and ETF positions, this suggests much of the speculative excess has been worked out of the market.

While the recent price action may feel frustrating for bulls, this type of consolidation is often healthy. Lower volatility, lighter positioning, and reduced leverage can help establish a stronger foundation for the next sustained rally when the fundamental and macro catalysts eventually align.

Meanwhile, the World Gold Council reported that central banks resumed net gold buying in April, adding 17 tonnes after March's brief pause. Continued reserve diversification away from traditional fiat assets remains an important source of long-term support for gold and reinforces the broader bullish case.

Major Takeaway: Near-term price action is being driven by a stronger dollar, shifting Fed expectations, and geopolitical headlines. Longer term, central bank demand, reserve diversification, and physical market fundamentals remain supportive. Until there is a meaningful resolution to the Iran crisis, it may be easier for many investors to remain patient, maintain core precious metals holdings as a portfolio hedge, and wait for greater clarity before adding significant exposure.

Views are my own and provided for informational and educational purposes only. This is not investment advice.

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