Precious metals rise sharply as oil price falls

Following last week's interest rate decision by the US central bank, this trading week was dominated by the Iran war. For the umpteenth time, the American side announced that a peace agreement and the reopening of the Strait of Hormuz is only a matter of time. Iran confirmed those reports and claims to be moving towards an agreement with Oman, its channel of communication in the negotiations.

As a result, we saw the oil price fall sharply, the market now expects a less strict US central bank, the US dollar declined, and gold, silver and platinum were able to post significant gains.

At the time of writing, the gold price is up more than 4 percent on last week, while the platinum price and silver price both rose by more than 5 percent.

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Strait of Hormuz far from normalised

Although this is once again positive news, nothing is definitive yet. At the time of writing, shipping traffic in the Strait of Hormuz has not returned to normal. Far from it, in fact. Currently, just two ships are reportedly sailing through the strait, which amounts to roughly 3 percent of normal traffic.

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Other statistics, such as insurance prices, daily throughput, spot prices for tankers and other measures, are also far from encouraging. In other words, for now we still have to trust that the United States and Iran really are moving towards an agreement.

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The market still doubts a peace deal

The fact that the market also still has some doubts about the idea of peace is reflected not only in oil prices, but also in the US 2-year yield. Brent and WTI oil prices are still trading above pre-war levels, while the yield on 2-year US government bonds has edged down cautiously since the end of July.

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By now, the market also knows how much statements about peace are worth in this war. After all, this is the umpteenth time we've heard almost exactly the same story. In that respect, it's all the more interesting that gold and the rest of the precious metals complex have already begun a cautious breakout.

A strong technical picture for gold

In previous weeks, we already wrote about the strong technical picture we were seeing for gold and silver. As far as gold is concerned, the support around the $4,000-per-ounce level stood out. Despite rising rates, inflation expectations and a stronger dollar, gold held its ground at that price.

The chart below shows this with the grey box, which extends back to the fourth quarter of 2025. Back then, too, the gold price found support in this zone.

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We're also seeing a bullish divergence, indicated by the arrows. This occurs when the price sets a lower low while the Relative Strength Index (RSI, bottom panel) records a higher low. That means a price decline is accompanied by less momentum. Typically, that points to a reversal of the trend.

Furthermore, gold is currently attempting to break through the 55-day exponential moving average. That's the blue line in the chart above. If it manages to turn that moving average into a support level, that would be a very powerful signal from the precious metal.

Ready for a next phase of the bull market?

These are all signals suggesting that gold could, in theory, begin a next phase of the bull market. The hype of January 2026 has completely disappeared from the market, and after a long period of price declines, the chart looks ready for a resumption of the upward trend.

Now that the market is also starting to cooperate on the fundamental side, in the form of lower oil prices, falling rates and a weaker dollar, the gold price could well take flight. For that to happen, however, it's important that peace genuinely materialises between the United States and Iran.

Chinese retail investors are stepping back in

That we're already seeing gold rise before the market has certainty is a positive signal. At these price levels, investors evidently believe in buying gold, silver and platinum. In China in particular, retail investors are moving back into gold, as the Bloomberg chart below shows.

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In recent months, gold ETFs in China mainly recorded capital outflows. That changed in July. Investors are starting to accumulate gold again and appear to be betting on a continuation of the bull market. Volatility in other markets, particularly in AI stocks, is beginning to increase, prompting investors to cautiously look again at alternative assets such as gold.