Global gold and silver prices have experienced a significant upward movement, leading to gains across the precious metals sector.

On July 21st, spot silver saw its intraday gains widen to 1%, reaching $56.96 per ounce, while spot gold rose over 0.4% to $4,027.720 per ounce.

Concurrently, the precious metals segment on the stock market showed a short-term uptick. Shares in Chifeng Gold (600988.SH), Shandong Gold International (000975.SZ), Xiaocheng Technology (300139.SZ), Zhongjin Gold (600489.SH), and Xingye Silver & Tin (000426.SZ) all followed the broader trend higher.

According to the CME FedWatch Tool, the probability of the Federal Reserve holding interest rates steady in July is 84.5%, with a 15.5% chance of a cumulative 25 basis point hike. Looking ahead to September, the market assigns a 36% probability for unchanged rates, a 55.1% chance for a cumulative 25 basis point increase, and an 8.9% likelihood of a cumulative 50 basis point hike.

Analysts from CITIC Futures provided commentary on the macro environment. They noted that while June's CPI showed its first month-over-month decline since 2020, Federal Reserve Chair Waller has explicitly stated the inflation fight is not over, with several other officials echoing similar hawkish stances. Current market expectations suggest a low probability of a rate hike in July, but anticipation for a 25 basis point increase in either September or October continues to build, with at least one hike before year-end largely priced in. Oil prices have risen again following the breakdown of a U.S.-Iran ceasefire, and coupled with continued spending momentum from AI, inflationary pressures persist. The 2-year Treasury yield has climbed approximately 75 basis points since late February, indicating the market has already priced in hawkish expectations.

From a capital flow perspective, funds have been rotating out of previously popular assets. Gold, as a prior consensus trade, continues to face capital outflows. Historical patterns suggest it typically takes over 10 months to reclaim previous highs, indicating the current adjustment period may still be insufficient.

Geopolitically, the U.S.-Iran conflict has entered its fifth month, with tensions in the Strait of Hormuz remaining elevated.

Regarding market sentiment, following a substantial adjustment in previous long positions, sentiment has turned cautious, with reactions to geopolitical fluctuations becoming notably muted. On the physical demand side, central bank gold purchasing demand remains robust, providing a solid floor for prices and limiting the potential for deep corrections.