On Tuesday, when the US-Iran conflict reached its 151st day, Iran’s Islamic Revolutionary Guard Corps (IRGC) launched multiple ballistic missiles at US forces based in the Middle East in what the U.S. military described as an attempted surprise attack. But all of the missiles were intercepted, and no casualties were reported, according to U.S. Central Command (CENTCOM).
President Donald Trump had halted U.S. airstrikes on Iran last week to allow diplomacy to proceed, saying Washington and Tehran were holding “good talks” while warning military action would resume if negotiations failed.
Iran has publicly rejected suggestions that formal talks are underway, although contacts have continued through mediators.
Iraq’s Iran-aligned Popular Mobilization Forces (PMF) said that U.S. and Saudi forces carried out airstrikes on its headquarters across several Iraqi provinces.
Saudi Arabia has separately said it intercepted drones launched from Iraqi territory targeting oil facilities and has blamed Iran-backed militias for the attacks.
The attacks ended a four-day pause in direct military exchanges between Washington and Tehran and raised the risk of renewed escalation after a brief diplomatic opening.
On Wednesday, futures remained relatively stable in Asian trading, as investors refrained from significant positioning ahead of the U.S. Federal Reserve’s policy decision later in the day. The rebound in oil prices, following renewed U.S.-Iran hostilities, has heightened concerns regarding inflation.
On Tuesday, gold futures slipped more than 1% as a stronger U.S. dollar weighed, but on Wednesday, the ticked 0.1% lower while remaining near a one-month high, making gold more expensive for overseas buyers.
The Federal Reserve is widely expected to leave interest rates unchanged at the conclusion of its two-day meeting later on Wednesday.
According to CME Group’s FedWatch Tool, traders see the central bank keeping rates on hold, with markets instead focusing on Fed Chair Kevin Warsh’s comments for clues on the timing of any future policy easing.
At the same time, oil futures rebounded more than 4% on Wednesday after the latest attacks by Iran. I find that the higher oil prices amid a re-escalation in the Middle East will weigh on gold in early morning trading, reigniting inflation concerns, which are likely to surge energy-driven inflationary fear once again.
Undoubtedly, gold futures could experience extreme fluctuation before taking a directional move after the Fed’s decision tonight, while investors will continue to focus on geopolitical developments in the Middle East.
I expressed doubts over Israeli Prime Minister Netanyahu’s role in disrupting President Trump’s diplomatic efforts to resolve the Iran war in my previous article, and the situation turned out the same as I described.
Technical Levels to Watch
On a daily chart, gold futures, after opening the day at $4,020.80, tested the day’s high at $4,036.65. The day’s low at $4,035.35, trading near the day’s high, and trying to hold the significant support at $4,024, where a breakdown could push the futures to test the next key support at $3,955.16 shortly, as energy-driven inflation remains intact.
On the 1-Hr. chart, gold futures are facing significant resistance at $4,035, despite testing a low at $4,009.86 on Tuesday, after a steep fall, after facing stiff resistance at 4,046. I anticipate that soon the gold futures will break yesterday’s low; the selling spree could accelerate in today’s session.
I conclude that gold futures could experience a selling spree during the last four hours today, before closing.
Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is based solely on observations.
