The market expects that the U.S. CPI in June will be lower than the previous value, and precious metals are expected to rebound in the short term

The market expects that the U.S. CPI in June will be lower than the previous value, and precious metals are expected to rebound in the short term.

Last week, factors such as weak U.S. non-agricultural data and central bank gold purchases pushed up precious metal prices. However, the Federal Reserve released a "hawkish" signal, some funds took profits, and the overall price of precious metals adjusted to a high level.

The prospects for US-Iran negotiations are complicated After the United States and Iran signed a memorandum of understanding on the armistice in mid-June, crude oil prices fell sharply, and expectations for a rebound in consumer-side inflation in Europe and the United States have eased.

Germany's June Consumer Price Index (CPI) annual rate was 2.3%, and the Eurozone's June CPI annual rate was 2.8%, both lower than expected and the previous value. The market expects the U.S. June CPI annual rate to be 3.9%, also lower than the previous value.

However, recently, the United States canceled Iran's oil sales license, and the situation in the Middle East has heated up again. Iran's Supreme Leader Mojtaba once again named the United States and Israel as the parties responsible for the attack on Ali Khamenei and other victims.

He made it clear that Iran will pursue relevant responsibilities and respond with retaliation. U.S. President Trump said that 1,000 missiles have been targeted at Iran and that if Iran assassinates or attempts to assassinate him, thousands more missiles will be launched immediately.

The high degree of distrust between the United States and Iran will undoubtedly increase the uncertainty of armistice negotiations. European and American central bank policies are uncertain Since the outbreak of the geopolitical conflict in the Middle East, the closure of the Strait of Hormuz has caused crude oil prices to rise sharply.

The annual CPI rates in Europe and the United States are both well above the 2% inflation target. As a result, the European Central Bank raised interest rates by 25 basis points in June. Some officials from the Federal Reserve began to discuss raising interest rates and the expected time for raising interest rates has been advanced to September.

Later, as the United States and Iran signed an armistice memorandum of understanding in mid-June, falling crude oil prices led to a decline in the annual CPI rate in Europe and the United States.

The European Central Bank's expectations that it would not raise or cut interest rates in the second half of the year increased, and the expected timing of the Federal Reserve's interest rate hike was postponed from September to October.

On July 10, Federal Reserve Chairman Warsh appointed more than a dozen external consultants and announced the establishment of five working groups to try to promote the reform of the Federal Reserve and implement "interest rate cuts + balance sheet reduction." However, the current annual CPI rate in the United States is still around 4%, which is far from the 2% target.

Coupled with the situation in the Middle East heating up again and Iran announcing the closure of the Strait of Hormuz, it is difficult for European and American inflation levels to decline smoothly. The European Central Bank is expected to raise interest rates once in the second half of the year.

The Federal Reserve is expected to raise interest rates earlier than September, with a probability of more than 50%.

It can be seen that the uncertainty of the situation in the Middle East may trigger repeated inflation on the consumer side in Europe and the United States, which in turn will lead to repeated expectations of interest rate hikes by the Federal Reserve and other European and American central banks.

Expectations of Japan's rate hike may trigger reversal of yen carry trade The ratio of the Japanese government's outstanding debt to gross domestic product (GDP) has exceeded 250%.

However, in order to alleviate the impact of geopolitical conflicts in the Middle East on Japan's consumer-side inflation and people's daily life, the Japanese government passed a supplementary budget for the 2026 fiscal year (April 2026 to March 2027) totaling approximately 3.11 trillion yen on June 5.

The Japanese government's basic fiscal balance, which was originally expected to achieve a surplus, turned into a deficit. The U.S. dollar-yen exchange rate rose to around 162 points. The Japanese Ministry of Finance intervened in the Japanese yen exchange rate expectations by selling U.S. debt and other U.S. dollar assets. However, the sell-off of U.S.

debt has pushed up U.S. bond yields and increased fiscal interest payment burdens, which may cause dissatisfaction with the U.S. government. The Japanese government has suppressed the annual CPI rate at around 1.5% through fiscal subsidies.

However, as the decline in fiscal subsidies and rising oil prices have caused imported inflation, the annual CPI rate in Tokyo, Japan, in June was 1.7%, higher than expected and the previous value, indicating that Japan is facing increasing inflationary pressure, and the Bank of Japan is expected to raise interest rates every few months in the future.

The difference between the yields on U.S. and Japanese government bonds has fluctuated and trended lower. The narrowing of the interest rate spread may trigger a reversal of the Japanese yen carry trade, which will in turn put pressure on U.S. debt, U.S. stocks and commodity prices. To sum up, if the annual rate of U.S.

CPI declines in June, the Fed's interest rate hike expectations will weaken, and precious metal prices are expected to rebound in the short term.

However, we need to be wary of the uncertainty of geopolitical conflicts in the Middle East, which will trigger repeated policy expectations of the Federal Reserve and other European and American central banks, as well as the reversal of the Japanese yen carry trade. (Author's unit: Hongyuan Futures) (

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