Heraeus precious metals analysts stated that gold and silver prices should benefit from lower oil prices as inflation expectations moderate and bond yields drop, while the gold market's center of gravity may be shifting toward Asia. Gold fell below $4,000/oz for the first time since November 2025 last week amid renewed U.S. dollar strength, with the implied probability of a rate hike at the 29 July FOMC meeting hovering around 35%. The strengthening dollar, which rose above 101.5 on the U.S. Dollar Index, has pressured precious metals prices as higher rate expectations bolster the currency and make gold more expensive for non-dollar buyers.
Gold Prices Pressured by Dollar Strength and Rate Hike Expectations
Heraeus analysts noted in their latest update that precious metal prices remained under pressure amid the renewed strength of the U.S. dollar. The market continued to price in a more hawkish Federal Reserve, with the implied probability of a rate hike at the 29 July FOMC meeting rising to around 35%, up from less than 10% before last week's meeting. The likelihood of higher rates has bolstered the dollar, which has risen to its strongest level since May 2025. The US Dollar Index rose above 101.5, having hit its 52-week low just above 95.5 at the height of the precious metals price rally earlier this year. While a strengthening dollar does not always mean weaker precious metals prices, the same macro factors often affect both, with a stronger dollar also making precious metals more expensive for non-dollar buyers. Spot gold is trading close to its session low, last trading at $4,035.33 for a loss of 1.30% on the session.
China's Gold Imports Rose 63% Year-on-Year in May
China's gold imports rose to their highest levels in two years last month. China imported 162.6 tonnes of gold in May, up from 99.5 tonnes in May 2025, an increase of 63% year-on-year, according to Heraeus analysts. So far this year, non-monetary gold imports to China total 691.6 tonnes. This is up 76% from 393.6 tonnes year-on-year for the January to May period, though it does not quite reach the 840.6 tonnes imported over the same period in 2024. This was driven by robust demand for physical bars and gold accumulation plans where retail investors can buy gold with smaller amounts of money deposited each month. While imports were higher, wholesale demand was down 36% year-on-year, making it the weakest May since 2010, as jewellers put off purchases owing to recent pullbacks from high gold prices.
Hong Kong Banks Import Gold Bars Ahead of July Clearing System Launch
At least four of the 11 banks participating in Hong Kong's planned gold clearing system are importing 400-ounce London Good Delivery gold bars ahead of the mechanism's expected launch in July, according to Heraeus analysts. The move signals both Hong Kong's ambition to strengthen its role as a regional bullion hub and Asia's growing importance in global bullion markets, since it comes ahead of Singapore planning to open its own gold clearing mechanism later this year. In May 2026, the Hong Kong government set a target of achieving over 2,000 tonnes of gold storage capacity within three years by encouraging the Airport Authority Hong Kong and financial institutions to expand storage capacity, highlighting the potential size the bullion market could reach.
Silver Fell Below $60/oz for First Time Since December 2025
Heraeus analysts pointed out that silver prices have also continued their slide following the Fed's latest meeting. The price of silver fell below the $60/oz mark for the first time since December 2025. This means the price now sits below key support around the $61/oz level. This comes as the US Personal Consumption Expenditures (PCE) price index came in as expected at 4.1% year-on-year, up from 3.8% last month and still well above the Fed's 2% target. Silver prices have risen off their earlier lows and are trading near the middle of their daily range. Spot silver last traded at $58.187 per ounce for a loss of 1.69% on the daily chart.
Oil Prices Returned Close to Pre-War Levels Below $75/bbl
The ongoing moderation in oil prices will likely lower inflation expectations, which could reinvigorate the precious metals market, according to Heraeus analysts. Oil prices have returned close to their pre-war levels with Brent Crude down below $75/bbl, having traded at over $100/bbl for large parts of the conflict. If no further closures of the Strait occur, the lower oil prices will begin to be passed on to producers and consumers. If this happens and the PCE price index falls, along with other indices, the likelihood of rate hikes will also reduce, strengthening the investment case for precious metals.
FAQ
Why did gold fall below $4,000/oz?
Gold fell below $4,000/oz for the first time since November 2025 as the market continued to price in a more hawkish Federal Reserve. The implied probability of a rate hike at the 29 July FOMC meeting rose to around 35%, up from less than 10% before last week's meeting. The likelihood of higher rates bolstered the U.S. dollar, which rose above 101.5 on the US Dollar Index, making precious metals more expensive for non-dollar buyers.
How much gold did China import in May?
China imported 162.6 tonnes of gold in May, up from 99.5 tonnes in May 2025, representing a 63% year-on-year increase. This was driven by robust demand for physical bars and gold accumulation plans where retail investors can buy gold with smaller amounts of money deposited each month.
When is Hong Kong's gold clearing system expected to launch?
Hong Kong's gold clearing system is expected to launch in July. At least four of the 11 banks participating in the planned system are importing 400-ounce London Good Delivery gold bars ahead of the mechanism's expected launch.
