As the US-Iran conflict enters its 203rd day, US President Donald Trump stated that he is approaching a significant decision regarding potential military action against Iran, telling Axios that “anything could happen” as he considers his next steps.
At the same time, Iran’s Islamic Revolutionary Guard Corps says that it has struck a Togo-flagged tanker as it attempted an “illegal passage” through the Strait of Hormuz.
At the same time, China has privately asked Iranian officials to help rein in the Houthis after Saudi Arabia appealed to Beijing following recent Houthi attacks, anonymous sources in Iran told the Reuters news agency.
Beijing publicly called for restraint, dialogue and the restoration of safe navigation, but Reuters reported that its private message went further.
The escalation also threatens to draw in other regional actors, specifically Saudi defence partners Pakistan and Turkiye, which signed a joint defence agreement with the kingdom last month.
On the other hand, fell about 1 percent, extending losses for a third session, but held above $100 on Friday as expectations of alternative routes for Middle Eastern barrels to reach markets outweigh worries over cross-border air attacks between Saudi Arabia and Yemen’s Houthis.
dropped $1.01, or 1 percent, to $103.77 a barrel as of 00:20 GMT, while decreased $1.03, or 1 percent, to $100.88 a barrel. Both benchmarks settled down roughly 1 percent on Thursday.
The declines came as traders largely dismissed fresh supply risks, even though Saudi Arabia and Yemen’s Iran-backed Houthis traded new air attacks across their border on Thursday, widening the regional conflict.
Upon analyzing the whole scenario, I find that the reason behind the interest rate hikes by the US Federal Reserve after a long time is severely driven by Trump’s tariffs, the energy shock following the US-Israeli war with Iran, and heavy investment associated with the artificial intelligence boom, which, taken together, have kept inflationary pressures strong.
On Wednesday, when the US Federal Reserve raised interest rates by 25bp, it was the first increase in three years.
Fed Chairman Kevin Warsh, in his speech following the rate hike, said renewed fighting between the US and Iran, which has pushed up petrol prices, helped convince Fed officials to support higher rates.
“There’s no hiding from hot spots around the world,” Warsh said.
On Thursday, the Bank of Japan raised interest rates as expected on Friday, citing concerns that inflation was coming increasingly close to crossing its 2% annual target.
The BOJ hiked its overnight call rate by 25 basis points to 1.25%, bringing the rate to its highest level since 1995. The hike was the central bank’s second such move this year.
Seven of the BOJ’s nine-member rate-setting board voted in favor of the hike, with Ayano Sato and Toichiro Asada calling for a hold on the grounds that Japan’s economic outlook was uncertain.
The BOJ said that while the Japanese economy grew moderately and was expected to continue doing so, the situation in the Middle East, plus growing artificial intelligence demand, presented inflationary risks.
At the same time, the Bank of England kept its key Bank Rate steady at 3.75% on Thursday as policymakers noted a muted impact on prices and wages in the United Kingdom from a global energy shock, although they hinted that rate hikes may be necessary in the coming months.
Economists had widely anticipated that the BoE would opt to leave rates unchanged, suggesting that a softening labor market and elevated market interest rates may be doing much of the work of tightening policy.
In a statement, BoE Governor Andrew Bailey argued that “so far, higher global energy costs have had a limited effect” on British prices and salaries. However, the central bank flagged that, with the ongoing conflict in the Middle East disrupting transportation and energy supplies, “it is difficult to predict what is going to happen.”
Undoubtedly, a rate hike would mirror recent decisions by global central banks keen on quelling mounting inflation. On Wednesday, the Federal Reserve rolled out its first increase since July 2023, with Chair Kevin Warsh stressing a desire to bring down price gains regardless of upward pressure from energy costs. Last week, the European Central Bank lifted borrowing costs for the second time this year and warned that inflation could remain “well above target for an extended period.”
On a weekly chart, after starting this week at $4,375, tested the week’s high at $4,433.60, and week’s low at $4,273.30, are trading at $4,432, just below the psychological resistance at $4,444, and trying to defend the immediate support at the 9 EMA ($4,411.76), where a breakdown below this could push the futures to test the next support at the 50 EMA ($4,290).
Undoubtedly, a weekly close below the 50 EMA will confirm the continuity of bearish pressure during the upcoming week.
On a daily chart, after opening the day at $4,385.07, tested the day’s high at $4,434.22, and the day’s low at $4,372.65, gold futures are facing significant below the psychological resistance at $4,444, while trying to hold the immediate support at the 9 EMA ($4,401), where a breakdown could push the futures to test the next support at the 100 EMA ($4,355.79) and the next support at the 50 EMA ($4,334.69), while all the Exponential Moving Averages have formed a “Bearish Crossover” on the daily chart by piercing the key support at the 200 EMA ($4,563.74) on the daily chart.
Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is based solely on observations.
