US-Iran Tensions Drive Gold and Silver Prices Higher Amid Crude Surges

The escalating US-Iran tensions have driven investors to seek safety in gold and silver, causing their prices to rise. Spot gold is trading near $4,417.87, up 1.46%, while spot silver is at $67.37, up 2.46%. The US dollar's weakness against major currencies also supports the metals' prices.

The Brent crude price has surged past $100 a barrel, and WTI crude has risen to $95.70. Treasury yields remain elevated, with the 10-year yield near 4.81%, its highest level since October 25, 2023, posing a headwind for non-yielding assets like gold and silver.

The US responded to Iran's attack on US warships in the Gulf of Oman by destroying five Iranian oil tankers. This escalation follows Saturday's attacks on two US warships. The markets are currently pricing a 60% chance that the Federal Reserve will raise rates by 25 basis points at its meeting on September 15-16.

The inflation readings this week, including the Producer Price Index on Thursday and the Consumer Price Index on Friday, will be closely watched for their impact on yields and metals prices. A hotter-than-expected reading would likely keep yields elevated and cap the metals' rally, while a softer print could ease rate expectations and open room for gold to break higher.