Gold hits 2-month low, -2.3%

On May 27, gold and silver got hit hard. A potential US-Iran agreement framework leaked mid-session, the Middle East risk premium evaporated, and the Fed rate narrative flipped in the same trading day. Precious metals had no defense.

Gold: The risk premium gets stripped out

Gold spent the session in steady decline after turning lower in Asian trading, closing down for the third consecutive day.

COMEX June gold futures dropped to an intraday low of $4,394.19 per ounce – a drop of approximately 2.3% on the day. Spot gold fell to $4,401.48, also down more than 2.3%.

Both figures mark the lowest intraday levels since March 27. In a single session, nearly two months of geopolitical fear premium was erased.

Silver: A faster, harder fall

Silver dropped more sharply. The metal carries a dual identity – part safe haven, part industrial commodity – and it had accumulated crowded speculative positioning on the way up. When sentiment flipped, the unwind was fast.

COMEX July silver futures hit a low of $71.89 per ounce, down nearly 2.98% on the day and the lowest level since May 20. The intraday swing was closer to 4.5%.

Two macro forces hit at once

1. US-Iran deal framework leaked – Middle East risk cools

For weeks, the Strait of Hormuz supply risk had been a reliable floor under gold and silver. Then mid-session on Wednesday, reports emerged of a preliminary US-Iran framework: the US would lift its maritime blockade and partially withdraw forces, while Iran would reopen the strait to commercial shipping within a month. The prospect of a resolved shipping crisis pulled capital out of safe-haven assets and was the direct trigger for the day's sell-off.

2. Iran war risk rebound raises rate hike odds

The deeper macro headwind: rate path repricing. The Middle East conflict had been driving energy costs higher, feeding global inflation expectations. The market's realization: persistent inflation forces the Fed to keep rates higher for longer – and possibly hike again.

CME FedWatch data now shows futures markets pricing nearly 40% odds of a Fed rate hike before December. Rising rate expectations pushed Treasury yields higher and strengthened the dollar – a classic double blow for non-yielding assets like gold and silver.

What comes next

BofA's latest research note offered a measured view: "While a rebound in gold prices over the coming months could once again push silver above $100 per ounce, we believe silver is unlikely to sustainably outperform gold over the longer term given the overall slowdown in physical industrial demand."

The safe-haven premium has been partially unwound. What happens next depends on whether the Iran deal actually closes and whether the Fed holds its line.