Gold and silver opened the week sharply lower Monday, July 13, with spot gold sliding to about $4,061 an ounce and silver to roughly $58.22, extending a losing run as the weekend’s U.S.-Iran escalation drove oil higher and hardened bets on a Federal Reserve rate increase, according to dealer spot pricing, the CME Group’s FedWatch tool and minutes from the Fed’s June meeting. Gold fell about $61 from Friday’s level and silver nearly $1.80, adding to a prior week in which the metals lost roughly 1.5 percent and 4 percent. FedWatch showed the probability of a September hike firming toward 60 percent, with a smaller chance of a move at the late-July meeting.

The fresh leg down followed the weekend’s fighting. U.S. Central Command carried out its largest strike wave yet against Iran, hitting some 140 military targets, and early Sunday Iran’s Revolutionary Guard declared the Strait of Hormuz closed after firing on a vessel. Crude had already climbed about 7 percent the prior week, with Brent settling at $76.01 a barrel and U.S. West Texas Intermediate at $71.41 Friday. Higher energy costs revive inflation and lift real yields, undercutting metals that pay no interest. In 2026 a Hormuz flare-up now reads as an inflation shock that keeps the Fed hawkish rather than a safe-haven trigger, which is why the metals that once rallied on Middle East conflict are falling instead.

The intraday history has been volatile. Gold opened the prior week near $4,155, dropped to about $4,076 on July 8 after President Donald Trump declared the interim ceasefire over, steadied above $4,100 Friday, then broke lower at Monday’s open. Silver, hit harder because more than half its demand is industrial, slid toward $58 with the gold-silver ratio near 68. For the year to date gold is down about 3 percent and silver about 12 percent, a reversal after 2025 gains of 66 percent and 135 percent, and gold has just posted its worst quarter in 13 years.

The pressure traces to the Fed’s June turn. At the June 16-17 meeting, its first under Chair Kevin Warsh, the Federal Open Market Committee held its benchmark at 3.50 to 3.75 percent but lifted its median 2026 inflation forecast to 3.6 percent from 2.7 percent and raised the dot-plot rate projection to 3.8 percent from 3.4 percent, signaling rates staying higher for longer. Warsh, sworn in May 22 after a 54-45 Senate confirmation, declined to submit his own dot, the first chair to abstain, shifting more weight onto the data and the minutes.

Two catalysts land Tuesday. The Bureau of Labor Statistics releases June CPI at 8:30 a.m. Eastern, the last major inflation read before the July 29 decision, and Warsh makes his first appearance before Congress as chair at 10 a.m. before the House Financial Services Committee, followed by the Senate on Wednesday. Economists expect the headline to look soft, even negative, because oil fell about 21 percent in June during the mid-June truce, but core prices are seen rising 0.3 percent with the annual core rate stuck near 2.9 percent. The New York Fed’s latest survey put one-year inflation expectations at 3.7 percent, the highest since September 2023.

Wall Street is split. Mark Cabana, rates strategist at BofA Securities, said a firm core print could push the market toward a coin flip between a hike and a hold. New York Fed President John Williams has pointed to easing shelter costs, while Chicago Fed President Austan Goolsbee warned inflation is trending the wrong way. On the metals, Greg Shearer of J.P. Morgan said gold is stuck in a technical no-man’s land, though the bank still targets $6,000 an ounce by the fourth quarter. HSBC cut its 2026 average gold forecast to $4,560 from $4,864, and Macquarie sees prices drifting toward $4,300 by year-end. Consultancy Metals Focus and Adrian Ash of BullionVault argued the market has over-priced the odds of a hike.

Physical demand has stayed firm underneath the paper selling. China’s central bank, the People’s Bank of China, added 14.93 tonnes of gold in June, its 20th straight month of buying and the largest monthly increase in more than two and a half years, while the SPDR Gold Shares ETF drew its first weekly inflow since mid-June. The 2-year Treasury yield, which tracks near-term rate expectations, has pushed to its highest since 2025.

That leaves gold and silver hostage to Tuesday’s inflation print and testimony heading into the July 29 meeting. As long as the war keeps oil elevated and Warsh keeps a hike on the table, the classic safe havens will struggle to find a floor.

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