Precious metals exhibited a pattern of initial gains followed by a pullback, ending in a volatile range during the latter half of July. In the first half of the month, the main COMEX gold contract for August established a base between $3,950 and $4,000. As the semiconductor rally faded and safe-haven funds returned, precious metals positions increased, with Shanghai silver closing higher and showing greater elasticity than gold. Entering the latter half of the month, escalating US-Iran conflict pushed Brent crude oil above $100, and expectations for a September rate hike surged without signs of abating, weighing on precious metals valuations and causing gold prices to retreat from highs.

With the July FOMC meeting approaching, strong recent US economic data, combined with Fed Chairman Warsh’s “zero tolerance” stance on inflation and hawkish comments from FOMC voters like Logan, have prevented bulls from committing aggressively before the meeting minutes. On the other hand, as glimmers of a US-Iran ceasefire emerge, the WTI crude oil near-term September contract shows a double-top pattern, temporarily easing the geopolitical premium’s push on inflation expectations. Technically, COMEX gold displays a double-top and double-bottom structure.

Overall, we still do not see signs of a trending market in the short term. Although the July FOMC meeting offers a valuable opportunity to trade on monetary policy, the US-Iran situation remains unresolved, preventing crude oil from fully shedding its risk premium, and shipping rates continue to be a disruptive factor. September may be a better time anchor. We believe precious metals can currently be treated as a range-bound market, for reference only.

Market Review

From mid-July, precious metals began to show clear signs of bottoming. After a brief pause in US-Iran hostilities, the main contract, COMEX August, as noted in our previous reports, attempted two rebounds after reaching the 3,950-4,000 range in early July. This rebound was initiated alongside the fading of the semiconductor rally, with precious metals seeing strong bullish momentum and increasing open interest.

In late July, crude oil’s bullish momentum returned as US-Iran conflict reignited. As the conflict escalated, the WTI crude oil main contract price approached previous highs, with the market likely awaiting key US actions. After WTI crude oil exceeded $90 for a second time, precious metals failed a second test of the range’s upper limit, and bulls clearly fled. For the COMEX gold August contract, the market has experienced a clear double-top and double-bottom pattern on the technical chart. With no major fundamental changes, it can be treated as a range-bound market for now.

Looking at the current gold-silver ratio, after it plunged to a low on January 27, 2026, it has been steadily rising within a range. We have repeatedly discussed in previous reports that silver can be partially understood as a call option on gold, but traded in futures form. Some funds’ bullish view on precious metals, especially gold as the pricing center, manifests as long positions in silver, leading to a downward correction in the gold-silver ratio. From silver’s performance, whether COMEX silver or Shanghai silver, prices have not breached half of their all-time highs. In terms of accumulated funds, domestic funds in silver are also below those in cathode copper. This indirectly supports our view that precious metals are not in a one-sided bullish trend and still require a range-bound market approach.

US Economic Data Remains Strong in the Short Term

On July 24, S&P Global data showed the US July composite PMI preliminary reading rose from 51.9 in June to 53.6, exceeding the market expectation of 52.2 and hitting an eight-month high. The services PMI preliminary reading jumped from 51.2 to 53.6, the highest since November 2025. The manufacturing PMI preliminary reading was 53.8, slightly below the previous 53.9, hitting a four-month low. The strong services sector performance was mainly driven by the World Cup, Independence Day, and the US 250th anniversary celebrations, with consumers significantly increasing spending on dining, hotels, travel, and entertainment. This data may be partly overestimated, as the boost from the World Cup and celebrations could be short-term factors. Additionally, manufacturing momentum is starting to cool, and supply chains are deteriorating again—the pace of supplier delivery time extensions is the fastest since August 2022, and the increase in corporate selling prices is the fastest in nearly four years.

On July 24, the US Labor Department reported that initial jobless claims for the week ending July 18 fell by 22,000 to 187,000, the lowest level since September 1969, well below the 212,000 expected by economists. The four-week average dropped to 207,500, from a previous 214,300. For the week ending July 11, continuing claims stood at 1.796 million, a six-week low.

Even though many economists now point out that the sharp drop in initial claims is partly due to seasonal adjustment anomalies from the annual shutdown of summer auto plants, next week’s initial claims are likely to rebound to the recent average trend of over 200,000. Up to the next FOMC meeting, recent US economic data has all been favorable.

Furthermore, while US stocks have been volatile over the past few weeks, upstream earnings data has been good overall, and there have been frequent news of US-South Korea cooperation over the weekend. On July 26, according to Yonhap News, South Korean President Lee Jae-myung said, “South Korea and the US should expand their cooperation scope beyond the long-standing security alliance to include technology, innovation, and startup sectors.” He emphasized that combining world-class US venture capital capabilities and global networks with South Korea’s advanced technology and manufacturing competitiveness would create a new wave of global innovative companies. Lee also called for strengthened cooperation and increased investment from US venture capital firms in South Korea, while pledging to create the world’s most attractive investment and startup environment. He stated that South Korea would reform its visa system to better attract overseas entrepreneurial talent and lay the groundwork for a cooperation system between domestic and foreign companies, research institutions, and investors. He also pledged to help South Korean startups grow into globally competitive companies by connecting privately and government-managed funds. SK Group is deepening its strategic partnership with Nvidia, covering AI factories and next-generation storage technologies.

Samsung Electronics has signed a memorandum of understanding with Broadcom, covering cooperation in memory chips, foundry services, and advanced packaging until 2030, with a potential value of up to $200 billion. Samsung Electronics will collaborate with Broadcom to develop Broadcom’s next-generation AI accelerators based on Samsung’s HBM technology. Samsung Electronics will provide sub-2nm foundry processes and advanced packaging solutions.

Signs of US-Iran Ceasefire Over the Weekend

On July 25, according to CNN, over the past two weeks, the US Central Command had been striking Iran almost daily, but on Friday (this morning Beijing time), the US military did not announce any strikes on Iran. For 13 consecutive nights, the US Central Command had posted on social media about striking Iranian military targets. However, no such announcement was made on Friday night. It is currently unclear whether this means the US Central Command did not take military action against Iran on Friday.

According to Reuters, a senior Iranian source said that Iran would stop attacks as long as the US maintains its current ceasefire. After the US paused its strikes on Iran, Iran’s attitude is “more skeptical than optimistic.”

According to Axios, two sources said that President Trump on Friday instructed the US military not to launch new strikes on Iran, breaking a nearly two-week streak of daily attacks. The instruction came after 13 consecutive days of strikes on Iran. It is unclear whether Trump’s Friday order is a one-time measure or whether this calm will persist. Trump’s decision reflects both a willingness to leave more room for diplomacy and an acknowledgment that the effectiveness of US strikes has reached its limit without resuming large-scale combat operations. If Trump orders a resumption of strikes, the US military can mobilize in a relatively short time. Sources said the US military is still planning for a possible resumption of large-scale operations, but Trump has not yet issued an order in that direction. The White House did not respond. Additionally, an Omani delegation arrived in Tehran on Friday to negotiate new arrangements for the Strait of Hormuz. Sources said negotiations have made progress, and an agreement between Oman and Iran could be reached over the weekend. Trump will then decide whether to accept the proposed agreement.

According to Iran’s Mehr News Agency on the 26th, Iranian Foreign Ministry Spokesperson Baghaei said that Iran recently held deputy foreign minister-level talks with Oman on safe shipping management in the Strait of Hormuz, calling the talks “productive and making some progress.” He said the Omani delegation left Tehran on the 25th, but technical and political consultations between the two sides will continue. Baghaei also said there has been no change in the current navigation status of the Strait of Hormuz (Xinhua News Agency).

Based on current reports, the tone of statements from both US and Iranian leaders has shifted, with both sides showing emotional anticipation for the upcoming talks. Meanwhile, the WTI crude oil futures main contract has formed a clear double-top pattern. We lean towards the view that both sides believe they have accumulated enough leverage, making it difficult for bullish crude oil trades to continue. The pressure on precious metals prices is mainly due to the temporary rise in inflation expectations affecting Fed monetary policy.

Focus on the FOMC Meeting and Fed Officials’ Stance

The July FOMC meeting and its interest rate projections will take place on July 29 US time, with the official announcement early on July 30 Beijing time. According to the CME FedWatch Tool, the Fed is likely to hold rates steady in July. However, from July 24 to 26, the market’s expectation for a prolonged period without a US-Iran peace deal has clearly increased, leading to a definitive rise in the probability of a September rate hike. On July 24, the CME “FedWatch” showed a 65.3% probability of the Fed holding rates steady in July, and a 34.7% probability of a cumulative 25-basis-point hike. The probability of the Fed holding rates steady until September was 17.6%, with a 57% probability of a cumulative 25-basis-point hike and a 25.4% probability of a cumulative 50-basis-point hike. By July 26, the CME “FedWatch” showed a 65.8% probability of holding rates steady in July, and a 34.2% probability of a 25-basis-point hike. The probability of the Fed holding rates steady until September was 0%, with a 92.8% probability of a cumulative 25-basis-point hike and a 7.21% probability of a cumulative 50-basis-point hike. The expansion of the US-Iran conflict has clearly driven up market expectations for rate hikes.

On July 14, Fed Chairman Warsh clearly stated at a House Financial Services Committee hearing that the Fed has “zero tolerance” for persistent high inflation, saying “high inflation places an ‘unfair burden’ on the American people, and the Fed is firmly committed to restoring price stability.” He refuted market interpretations that a single month’s CPI decline of the largest magnitude in four years means the task of fighting inflation is complete, emphasizing that every future policy meeting will be “live” and that investors should stop relying on forward guidance. Furthermore, in the two months since Warsh took office, a hawkish faction within the FOMC is taking shape. Dallas Fed President Logan and Cleveland Fed President Hammack have both publicly stated that the Fed has waited too long to tackle inflation. Overall, the Fed is more hawkish than under Powell’s leadership. When the Fed announces its decision on July 30, the US will also release Q2 GDP, June PCE price index data, and weekly initial jobless claims. These data points will directly influence market pricing for the September meeting, so we generally believe that the precious metals market will experience low volatility until the 30th.

Summary

Precious metals followed a “bottoming, rebounding, then entering a range” pattern in the latter half of July. In mid-July, as the semiconductor rally faded, Shanghai gold and COMEX gold increased positions, with the August contract testing the $4,000 level twice. In late July, the renewed US-Iran conflict pushed up oil prices, causing precious metals to fail a second test of the top, with bulls exiting. Technically, COMEX gold shows a clear double-top and double-bottom structure. The gold-silver ratio has been steadily rising since its January low, silver’s rebound is weaker than gold’s, and its accumulated funds are lower than Shanghai copper, indicating the market has not formed a one-sided bullish momentum and should be treated as a short-term range-bound market.

On the macro level, US economic resilience acts as an overhead cap on precious metals. The July composite PMI preliminary reading of 53.6 hit an eight-month high, initial jobless claims fell to 187,000 (lowest since 1969), and combined with positive news on US-South Korea tech cooperation and large orders from Samsung and SK Group, market risk appetite remains high. Although the services sector rebound is affected by short-term holiday effects and initial claims data have seasonal adjustment noise, the overall economic performance still supports the Fed’s hawkish stance.

Geopolitics and policy are the key short-term variables. The US-Iran situation shows signs of easing: President Trump ordered a pause in airstrikes on Iran, Iran expressed willingness to stop retaliation if the US maintains its ceasefire, and Omani-mediated negotiations on the Strait of Hormuz have made progress. WTI crude oil has formed a double-top pattern, temporarily relieving the impulse-like surge in inflation expectations. However, market focus has shifted to the July FOMC meeting (early on the 30th Beijing time): CME data shows a 34.2% probability of a July rate hike, while the probability of a 25bp hike in September has surged to 92.8%, reflecting heightened inflation concerns. Fed Chairman Warsh reiterated a “zero tolerance” stance on inflation, emphasizing “real-time” policy decisions, and voters like Logan lean hawkish. Combined with the Q2 GDP and PCE data to be released on the 30th, we expect market volatility to contract before the meeting. We recommend maintaining a range-trading strategy and be alert to breakout risks triggered by policy signals after the decision. On the day of the meeting, it may be appropriate to bet on increased volatility. For reference only.