Recent movements in appear closely linked to the direction of crude oil prices. Iran’s restriction of the Strait of Hormuz has elevated prices, resulting in significant volatility in crude oil markets.
A plunge in oil prices intensified in the early afternoon after Energy Secretary Chris Wright said on X that “The U.S. Navy successfully escorted an oil tanker through the Strait of Hormuz to ensure oil remains flowing to global markets.”
Undoubtedly, the prospect of a prolonged energy shock momentarily dimmed, resulting in a steep decline in oil futures on Tuesday and Wednesday. But the message vanished within minutes, leaving investors the world over struggling to see through the fog of war emanating from the Trump administration itself.
A U.S. official soon after said that the military isn’t currently escorting commercial ships through one of the world’s chokepoints for oil and natural gas.
I find that the gold futures equally felt the impact of this jolt in oil, as though the elevated move by oil futures pulled down sharply, but pulled back up to $93, raising concerns for the gold bugs who are eagerly waiting for the inflation data announcement on Friday this week for further directional move.
President Trump has said again that the war will end “soon,” whenever he decides it should, as Iran says it’s ready for a “long-term war of attrition that will destroy the entire American economy.” Iran also warned that it would start targeting U.S.-linked banks across the Middle East.
Though approximately 140 U.S. service members were wounded in the first 10 days of the war with Iran, the Pentagon said Tuesday, as Secretary of Defense Pete Hegseth said the U.S. and Israel were “winning” the war and rapidly meeting their objectives.
On the other hand, the United Arab Emirates’ mission to the United Nations said Wednesday that the UAE “strongly welcomes” the adoption of a resolution passed by the U.S. Security Council calling for Iran to halt its attacks on Gulf states.
The resolution gained overwhelming support, with the most co-sponsors in Security Council history. This sends a direct message to Iran, according to the UAE mission. ’The Security Council is clear: Iran must immediately cease its attacks against our countries.’
The resolution was adopted earlier Wednesday in a 13-0 vote, with China and Russia abstaining.
Technical Levels to Watch
In a daily chart, on Monday, despite a reversal after testing the day’s low at $5,023, gold futures attempted to test the significant resistance at $5,250.20 on Wednesday but failed while on Thursday, after opening the day at $5,140.16, tested the day’s high at $5,147.09, and day’s low at $5,132.46, are trading at $5,144.
Undoubtedly, gold futures are currently trading below the 9 EMA ($5,153) and could head to test the immediate support at the 20 EMA ($5,115) if it breaks down below the immediate support at $5,123.
If gold futures find a sustainable move below the 20 EMA, they could head towards the next support at $5,005 as the war could end if U.S. President Donald Trump and Israeli Prime Minister Netanyahu soften their tone to turn the electoral opinion in their favor before the October and November elections in their countries.
Does it matter who wins this war? The main focus remains on escalating global inflation with elevated prices, as the Strait of Hormuz choked, and gold futures await further clues on this front.
Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is based only on observation.
