As the conflict between the United States and Iran reached its 140th day on Friday, both nations remain entrenched in a standoff over control of regional waterways.
The US military completed its latest wave of airstrikes against Iran at 9:40 p.m. ET Thursday, US Central Command said. It was the sixth consecutive night of strikes by US forces. While US bombing has largely focused on southern Iran, some recent strikes have reached deep inside the country.
Iran’s Islamic Revolutionary Guard Corps (IRGC) claimed to have targeted US forces in al-Tanf, Syria, in what it said was retaliation for deadly US strikes in Iranshahr, according to a statement reported Friday by semi-official Tasnim news agency.
Neither side has publicly signaled willingness to return to negotiations. Iran has warned that the Strait of Hormuz is an “unbreakable red line” and responded harshly to US President Donald Trump’s threats to hit Iranian infrastructure.
I find that the US and Iran risk entering a “forever war” as they continue to trade strikes after ceasefire talks were derailed. It took about two months to negotiate a page and a half of the memorandum of understanding, and it took only three weeks for it to unravel.
The two sides agreed to a shaky ceasefire in April and signed the memorandum in June. It was supposed to set the stage for talks on a permanent end to the fighting, Iran’s nuclear program, long-term administration of the Strait of Hormuz and other key regional issues.
Diplomatic gains have reversed over the past week after the US attacked Iranian cities in response to Tehran’s strikes on shipping in the Strait of Hormuz.
And in a familiar pattern, US President Donald Trump once again threatened to strike Iranian bridges and power plants, prompting the Iranian military to issue counter threats of expanding its targets across the region and blocking other maritime straits.
In four months of hostilities, Iran and the US have exchanged similar threats and engaged in tit-for-tat military escalation, yet diplomacy has continued. Despite this latest round of strikes being the most intense since the April ceasefire, Iranian officials have yet to follow Trump in declaring the truce “over.”
Since the war began, Iran has been keen to demonstrate its ability to withstand pressure and respond to any escalation by inflicting pain of its own. It has sought to send a clear signal that it, too, possesses military options and will use them. This round is no different.
Undoubtedly, amid such a scenario, despite Friday’s modest uptick, bullion was down about 3.4% for the week, putting it on course for its steepest weekly decline since early June as investors continued to favor the dollar and other interest-bearing assets.
The latest bout of selling followed another wave of U.S. strikes on Iranian targets on Thursday, a day after attacks damaged an oil tanker near Iran’s main export terminal. The renewed hostilities have extended the Middle East conflict into a fifth month, keeping crude prices elevated and reviving concerns that higher energy costs could reignite inflation.
Higher oil prices risk complicating the Federal Reserve’s policy outlook by increasing the likelihood that inflation remains above target. That could keep interest rates elevated for longer, supporting Treasury yields and the U.S. dollar while reducing the appeal of non-yielding assets such as gold.
This week’s U.S. consumer and producer inflation data pointed to easing underlying price pressures, but markets have largely looked through those backward-looking readings amid concerns that the latest rise in energy prices could reverse the disinflation trend.
Federal Reserve officials have continued to stress that inflation risks remain, even as recent data suggest price pressures are moderating.
Undoubtedly, the lack of a meaningful rebound following softer-than-expected U.S. CPI and PPI data earlier this week was “not a particularly encouraging sign” for gold’s near-term outlook.
The overnight decline now brings a stern test to the view that gold has formed a base around the late-June low of $3,942.
Technical Levels to Watch
On the daily chart, after testing the immediate support at $3,974.30, are facing significant resistance at $4,012, todays high. Trading much below the immediate resistance at $4,030 and a breakdown below the immediate support at $3,955.93 could trigger a selling spree before today’s close and extend bearish pressure.
On the weekly chart, gold futures are maintaining a 55-degree slide after testing a secondary peak at $5,452.52 on March 2, 2026, while today, futures are trying to hold the tested lows of November, 2025.
Undoubtedly, if gold futures fall below the key support at $3,955 tonight, panic selling could start next week.
I conclude that if gold futures find a breakdown below the key support at $3955, they could retest the October 2025 lows at $3,895 soon.
Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is based solely on observations.
