On Monday, when the conflict between the US and Iran reached its 150th day, following 13 straight nights of U.S. strikes on Iranian targets, President Donald Trump halted the bombing campaign late on Friday. Iran also refrained from launching retaliatory attacks against neighbouring countries hosting U.S. military bases over the weekend.
Undoubtedly, President Trump often celebrates his unpredictability, declaring that it keeps allies and adversaries alike off balance.
By his telling, his willingness to bomb Iranian nuclear sites 13 months ago, and send Delta Force commandos in to snatch President Nicolás Maduro of Venezuela from his bed in early January, reflected his determination to execute military operations that would have made his predecessors blanch. He told The New York Times he was limited by “my own morality,” as he wielded the world’s biggest hammer.
But in recent weeks, he has seemed trapped, his presidency gradually consumed by a war he cannot find his way out of.
He has discovered limits on his power that he could have scarcely imagined as he began full combat operations on Feb. 28, when he set out goals, with his close ally Israeli Prime Minister Netanyahu, to set out goals for a swift end to Iran’s nuclear program and the overthrow of the country’s government.
Five months later, those goals remain almost entirely unaccomplished. And Mr. Trump, once confident that overwhelming force would enable him to pursue in Iran what he proudly called the “Venezuela model” — a change of government to one amenable to U.S. control — is now hesitant to plunge back into major combat operations that his intelligence agencies assess are unlikely to work as well in Tehran.
Now, when he has been unable to control surging oil prices, or their effects on the global markets, as the shipping that crawled to a stop in the Strait of Hormuz, then was opened for a few short weeks, is back to a trickle, with a second choke point, between the Red Sea and the Gulf of Aden, now threatened.
And while the president has threatened to take Kharg Island, where Iran ships oil, or to seize its underground stores of enriched uranium, he has said publicly that he knows there is no appetite for sending in ground troops.
Those limits have left him deeply frustrated, his aides say, and have made him more erratic, even by Trumpian standards. Last week alone, Mr. Trump’s energy secretary signed a historic pact with Saudi Arabia to provide civil nuclear power to the kingdom, before the president undercut the deal less than 24 hours later, stunning the Saudis by declaring that the agreement, negotiated over 18 months, was dead unless the country joined the Abraham Accord and recognised Israel.
Aaron David Miller, a former U.S. diplomat with long experience in the Mideast, said that Mr. Trump again “alienated the Saudis, delighted Benjamin Netanyahu and gave Iran strong talking points as to why cutting deals with the U.S. is a fool’s errand, bound to be betrayed.”
Triggering these moves was a pause in fighting between the United States and Iran over the weekend, which rekindled hopes for diplomatic efforts to secure a lasting ceasefire agreement.
Just a few minutes back, Israeli Prime Minister Benjamin Netanyahu declared Iran would be a key issue “on the agenda” with US President Donald Trump as he boarded a plane to Washington, DC.
I observe that this unexpected pause in fighting between the U.S. and Iran over the weekend could be disrupted by tomorrow, as Netanyahu has been a staunch advocate of a renewed offensive on Tehran, expressing scepticism over Iranian officials’ intentions behind nuclear-related negotiations.
I observe that despite starting the day with a gap-up, supported by sliding Treasury yields and a weaker U.S. dollar, as investors gauged inflation expectations after oil prices dropped amid a pause in Middle East hostilities.
Undoubtedly, lower oil prices could reduce inflation pressures; investors are awaiting the Fed’s assessment of the economic outlook following recent market volatility.
But futures have sensed the upcoming disruption due to surging scepticism about how President Trump reacts to Iran, after meeting Netanyahu, as he has a long record of disrupting peace talks since the beginning of the truce, despite experiencing the disastrous impact of the tension generated by him on February 28 this year.
Though the US central bank is widely expected to leave interest rates unchanged on Wednesday, there is still a one-in-three chance of a borrowing cost hike, according to CME FedWatch. Traders will closely scrutinize Chair Kevin Warsh’s remarks for clues on the timing of and policymakers’ assessment of inflation risks.
But Netanyahu’s visit could reverse the whole positive scenario if President Trump changes his stance on resolving the Iran war issue by diplomatic means. If he takes a U-turn at this stage, all positive hopes could turn precarious.
I conclude that though the trajectory of Fed interest rates is crucial for gold, as the non-yielding asset tends to underperform in elevated rate environments. But now the focus has shifted to Netanyahu’s disruption while both the US and Iran are heading for diplomatic resolutions, as the global economic scenario could turn worse due to choking of the Strait of Hormuz and Bab el-Mandab.
Technical Levels to Watch
On the daily chart, despite opening the day at $4,097.15, gold futures tested the day’s high at $4,118.75 and the day’s low at $4,076.10; gold futures are trading near the day’s low, and have formed a “Bearish Hammer”, signalling a slide on Tuesday, if Netanyahu shattered hopes on peace talks.
On the 1-Hr. chart, gold futures have already signalled an advent of weakness, which could surge if gold futures find a breakdown below the key support at the 200 EMA ($4,072) in today’s session.
I find that Netanyahu’s intervention in currently developments to end the war by both the US and Iran, could repeat a sell-off, as seen on June 17, when the United States and Iran signed a 14-point memorandum of understanding (MoU)—also referred to as the Islamabad Memorandum—establishing a 60-day temporary ceasefire and framework to negotiate an end to the conflict but failed shortly, resulted in steep slide to tested the lows at $3,957 on June 30, 2026.
