Gold and silver break key levels as copper eyes tariff decision

In our latest update, we flagged the growing two-way risk to gold, silver, and platinum, each facing stiff resistance levels that threatened to trigger a period of prolonged sideways consolidation. Yet, just days into June, the market narrative swiftly changed: gold and, more notably, silver pierced through key technical barriers, while platinum paused to consolidate after a sharp rally in May. The immediate catalyst was a broadening decline in the US dollar, with the Bloomberg Dollar Spot Index now trading near a two-year low. However, beneath the surface, resurgent geopolitical risks and renewed trade war anxieties are also feeding into the bullish momentum across the precious metals complex.

Looking beyond the technicals, macroeconomic currents are shifting. For decades, large global current account surpluses—mirrored by persistent US deficits—have found their way into US assets, helping to sustain dollar strength. That dynamic, however, is now in question. Protectionist trade policies and rising political polarization, once viewed as transitory, are increasingly seen as structural risks, prompting sovereign wealth funds and institutional investors to rebalance away from overexposure to US equities and Treasuries.

This reallocation has already played a visible role in lifting gold prices, as investors seek insulation from mounting concerns around US fiscal sustainability. The US Treasury faces a formidable refinancing wall, with roughly $9.2 trillion in Treasury securities maturing in 2025—equivalent to nearly 30% of US GDP and a full third of outstanding marketable debt. Layer on top the CBO’s projected $1.9 trillion deficit for FY 2025, and the stage is set for an aggressive funding schedule in a potentially less hospitable bond market.

In a recent CBS interview, Treasury Secretary Scott Bessent sought to allay fears, insisting that “we are on the warning track and will never hit the wall” with respect to default risk. Nevertheless, the bond market remains nervous, with talk of a “fiscal debt black hole” echoing through corners of the macro community. The implication: unless growth and revenue surprise to the upside, the only viable escape route may be renewed quantitative easing—potentially inflationary and ultimately supportive of hard assets like gold.

Technically, gold has now broken above the downtrend from its April 22 record high at $3,500, with that former resistance line now turning into support near $3,325. Additional layers of support are seen at $3,280 and the 55-day moving average at $3,223. While we remain cautious about declaring an imminent charge to fresh all-time highs, the macro setup is shifting in favour of precious metals. A potent mix of post-stimulus fiscal drag, tariff-induced supply shocks, waning consumer confidence, a weakening labour market, and deteriorating real spending power may soon warrant a dovish and potentially stronger-than-expected policy pivot from the Federal Reserve, potentially then sending bullion prices higher towards USD 4,000.