Gold Pulls Back After Spiking—Has Geopolitical Risk Been Fully Priced In?

Market Overview

Last week, former President Trump announced a strike on three Iranian nuclear facilities, triggering a sharp escalation in geopolitical tensions and posing a major threat to global oil supply chains. As a result, crude oil prices surged nearly 6%, and spot gold briefly jumped to $3,398. However, a rebound in the U.S. Dollar Index capped gold‘s gains, leading it to retreat to $3,355 by the session’s close. Meanwhile, U.S. equities underperformed on triple witching day, with both the S&P 500 and Nasdaq reversing gains and closing lower, reflecting deepening investor concerns over the rising uncertainty.

Hot Topics to Watch

● Is Golds Price Action Signaling a Disconnect？

Tensions between Israel and Iran continue to intensify, and the U.S. has openly signaled possible military intervention. Despite this, gold‘s geopolitical risk premium appears to be fading unusually fast. According to Deutsche Bank, this could be a misleading signal. The bank’s research shows that gold typically sees its event-driven risk premium peak between the 8th and 20th trading day following a crisis, with average gains of 5.5% in spot prices and 6.3% in model residuals. Given the severity of the conflict and tangible U.S. military movements, Deutsche Bank advises investors to prepare for a potential re-pricing of geopolitical risk in gold over the coming weeks.

● Trump Targets Powell Again

Former President Trump has once again ramped up his criticism of Federal Reserve Chair Jerome Powell, suggesting he might reconsider firing him. Trump's demands for rate cuts have also escalated—from an initial call for a 100-basis-point cut to now advocating a policy rate between 1% and 2%, signaling intensifying political pressure on the Fed.

Key Events to Watch

21:45 GMT+8 – US S&P Global Manufacturing & Services PMI (Preliminary, June)

22:00 GMT+8 – US Existing Home Sales (May, Annualized), Fed Governor Bowman speaks on monetary policy and banking

Overnight

02:30 GMT+8 – Fed Governor Kugler and permanent FOMC voter, New York Fed President John Williams, host the “Fed Listens” event