Gold slid to a two-month low as a stalled U.S.-Iran situation coincided with
rising Fed hawkish risk. Markets had priced an imminent deal and reopening of
the Strait of Hormuz, but there is no official confirmation—only noise and
rumors. Limited reciprocal strikes occurred recently while the U.S. says the
ceasefire still holds. A growing number of Fed policymakers favor abandoning
dovish leanings, increasing the odds of a hawkish outcome at the June FOMC. If
tensions remain unchanged, persistent inf and resilient U.S. data raise the risk
of a hawkish surprise. Near term, resolution and Strait reopening would likely
push oil lower and revive easing/cut expectations, supporting gold; prolonged
closed and sustained high oil would increase pressure for Fed tightening,
weighing on bullion.
