For this entire year thus far, precious metals have taken a beating largely due to one force: the war with Iran and the attendant oil-fueled inflation. As this week started, there were signs that this tide is reversing its course. Should gold investors start getting their chopsticks ready?
Let’s back up for a bit and set the context because context is everything. Under normal circumstances, gold thrives during geopolitical turmoil as investors seek safe havens for their portfolios. However, the U.S. war with Iran introduced a curveball in the name of skyrocketing crude oil prices due to disruptions to shipping through the Strait of Hormuz.
As oil prices soared, inflation spiked and pushed central banks, especially the U.S. Fed, to think seriously about raising interest rates to bring inflation under control. As you already know, gold is non-yielding, so when interest rates stay elevated, investors opt for investment vehicles like stocks and treasuries that bring a return. When this happens, gold prices suffer.
That is exactly what has pressured precious metal prices thus far in the year, and is the primary reason why gold’s price has retreated by around 28% from its historic high recorded in January. Prices have been choppy at best since then, but the picture appears to be changing shape.
On Monday, President Trump revealed on Truth Social that several countries in the Gulf, and Iran, had prevailed upon him to call off a planned major strike against Iran that had been in the offing. While Iran was quick to label Trump’s post as just another of his endless lies, markets reacted strongly.
Crude prices retreated by at least 5% and Brent was priced at $83 a barrel. WTI crude dropped by an even larger percentage and was trading at $79. Additionally, OPEC+ agreed to ramp up daily oil production by nearly 200,000 barrels each day.
An oil production increase, dropping crude oil prices, and declining odds of interest rate hikes all change the shape of the table to favor precious metal prices.
To top it all, the structural dynamics of the gold market haven’t changed and it is still a structural bull market. According to data released by the World Gold Council, central banks bought a whopping 289 tons of bullion in Q2 of this year. That was a 74% jump from what was bought by these institutions during Q2 of 2025. Whether gold prices went up or down, central banks kept buying, and they are still buying.
Given that there is only a limited amount of gold to go round, heightened central bank accumulation puts pressure on supply and supports gold prices. The weeks ahead will be interesting to watch, and gold-linked entities like Collective Mining Ltd. (NYSE American: CNL) (TSX: CNL) are most likely going to be glued to market developments as the picture unfolds.
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