Gold has been in the red for the third consecutive week, dropping below $4,200 per ounce, losing 0.5% today after a 1.1% decline on Thursday. Since pre-war levels in February, the metal has already lost about 22%, and the logic behind this decline persists even after the signing of the Iran agreement.

The paradox of gold in this war is well known and has not gone away. The opening of the Strait of Hormuz has a dual effect on the metal. On the one hand, there is a positive aspect: lower oil prices reduce inflationary pressure, which theoretically reduces the need for rate hikes and removes the main brake on the metal. However, the hawkish signal from the Federal Reserve during Kevin Warsh's first meeting on Wednesday outweighed this optimism.

Warsh indicated that a rate hike remains on the table, and markets are already pricing it in for October with a probability of around 60%. Historically, gold performs worse in the lead-up to a rate hike. Now it depends on whether the upcoming increase is a one-time insurance step or the beginning of a new tightening cycle.

If the Fed raises rates once and then pauses, falling oil prices will do their part, inflation will begin to decline, and gold will have room to recover. However, if data continue to indicate persistent inflation, the metal will remain under pressure. The resolution of this will primarily depend on how quickly the opening of the Strait of Hormuz translates into a real reduction in energy inflation in the CPI data for July and August.

Silver is down 0.5% to $65.34, while platinum and palladium are also slightly cheaper. The dollar remains supported by expectations of a rate hike, although the opening of the Strait creates a headwind through the channel of inflation expectations.

Regarding the current technical picture for gold, buyers need to reclaim the nearest resistance at $4,186. This will allow them to target $4,249, above which it will be quite challenging to break through. The further target will be around $4,304. In the event of a decline in gold prices, bears will attempt to take control of $4,124. If they succeed, a breakout of this range will deal a serious blow to the bulls' positions and could push gold down to a low of $4,062 with the potential to reach $4,008.