Gold and Silver Prices Surge Again as Traders Anticipate Prolonged Conflict
Gold prices rose on Thursday alongside a weakening US dollar and moderating inflation. Market participants also reduced bets on interest rate hikes after Federal Reserve Chair Kevin Warsh failed to provide clarity regarding the direction of monetary policy.
According to Refinitiv, gold prices in Thursday’s trading (30/07/2026) closed at US$4,102.39 per troy ounce, marking a 0.92% increase. This surge extends gold’s positive trend, with a 1.86% gain over the last two days. Gold prices remained strong into Friday (31/07/2026) at 06:49 WIB, reaching US$4,108.72 per troy ounce, up 0.15%.
The US dollar index weakened to 99.86 during Thursday’s session, its lowest position since 16 June 2026. A weaker dollar makes gold, which is traded in dollars, cheaper for international buyers.
Gold price movements remained relatively stable after the US Department of Commerce reported that the Personal Consumption Expenditures (PCE) index fell by 0.1% in June, aligning with economist forecasts in a Reuters survey. However, this inflationary slowdown is expected to be temporary, as the resurgence of conflict in the Middle East has the potential to drive oil prices higher.
Bart Melek, Head of Global Commodity Strategy at TD Securities, stated that the PCE data was slightly better than market expectations, suggesting current inflation conditions are relatively stable. “The war in the Middle East does not appear to be ending soon. Consequently, the inflationary pressures that have eased in recent months have the potential to resurface,” Melek noted, as quoted by Refinitiv.
He added that the market believes central banks will eventually respond to these conditions. “This is what is driving gold prices to break through resistance levels, which we expect to be in the range of US$4,150 to US$4,200 per ounce,” he added.
A day earlier, the Federal Reserve decided to maintain interest rates. Following the announcement, Kevin Warsh reaffirmed his commitment to reducing inflation, but his statements were deemed to lack a clear picture of subsequent policy steps. Spot gold prices surged approximately 2% following the Fed’s decision.
According to the CME Group’s FedWatch tool, the probability of an interest rate hike at the Fed’s meeting on 15-16 September has dropped to 61%, down from approximately 77% prior to the meeting. Prolonged high interest rates generally reduce the appeal of gold, as the precious metal provides no yield.
Meanwhile, other US government reports showed that weekly jobless claims rose less than expected, indicating that the US labour market remains stable. The number of US citizens filing for initial unemployment benefits reached 197,000 for the week ending 25 July 2026. This figure is an increase of 9,000 from the 57-year low recorded the previous week, yet remains better than the market forecast of 200,000.