Gold and Silver Fall as Oil Rebounds on Hegseth's 'Locked and Loaded' Threat

GOLD and SILVER fell with stocks and bond prices on Thursday as crude oil rallied after the USA vowed to continue its naval blockade of Iran and threatened to resume air attacks unless Tehran agrees to Washington's terms for a peace deal.

"If Iran chooses poorly, then they will have a blockade and bombs dropping on infrastructure, power and energy," Secretary of War Pete Hegseth told reporters at the Pentagon, declaring that US forces remain "locked and loaded" amid the fragile US-Iran ceasefire agreed last week.

"So far, 13 ships [heading for Iran] have made the wise choice of turning around," added Washington's highest ranking military officer General Dan Caine, declaring that US forces will stop and board any vessels in international waters if suspected of trying to aid Tehran.

Silver prices lost as much as 2.1% inside 30 minutes while gold fell back through $4800 per Troy ounce, also halving this week's previous rally.

New York's stock market opened the day lower as European bourses cut their earlier gains, while long-term borrowing costs rose further from Tuesday's 4-week lows as bond prices fell again.

US stocks in the S&P500 index then crept back up to last night's fresh record-high level, continuing what a CNN headline calls a "remarkable recovery from war shock".

With gold dropping to $4773 per Troy ounce before rebounding back to $4800, silver regained 70 cents from its Hegseth-press-conference low beneath $78.10.

US crude oil futures in contrast rose to a 2-sesson high above $93 per barrel of WTI − almost 40% higher than the eve of this war − while futures for global benchmark Brent traded $5 dearer with a 3.9% rise for the day.

Sharply higher still were prices for physical crude oil delivered within a month, with Dated Brent trading above $120 per barrel.

"The gap shows that futures markets are betting on a rapid easing of the crisis [which has caused] an acute supply shortage," says Reuters, because the US blockade of the Strait of Hormuz "has cut off nearly a fifth of global oil flows."

With US-Iran peace talks set to resume after last weekend's failure, "Gold remains supported amid renewed optimism around de-escalation," said commodities analysts at Dutch bank ING earlier on Thursday morning as bullion prices neared $4840.

"Any fresh escalation would reignite inflationary pressure," agreed a note from Indian brokerage Kotak Securities. Because that would "reinforce the higher-for-longer narrative" around interest rates, it would therefore "weigh on precious metals."

Trading in US interest-rate futures today put a worse than 50-50 chance on the Federal Reserve cutting its key rate before July next year, more than 12 months later than the market consensus before the Iran War began, which saw rate cuts restarting this June according to data from the CME derivatives exchange's FedWatch tool.