Gold prices rose slightly on Tuesday, as they continued to await further positive momentum to regain their upward trend in the near term. If the yellow metal gains positive momentum, it could break the daily pivot point of $4,444 then test resistance levels at $4,483 and $4,520. On the downside, if the price settles below the aforesaid pivot point, it could retreat toward support levels near $4,373 then $4,332.
Global financial markets are navigating heightened uncertainty as geopolitical tensions in the Middle East intensify, concerns over energy supply disruptions push oil prices higher, and the U.S. dollar comes under renewed pressure. Against this backdrop, investors are closely monitoring developments in the region, fluctuations in energy markets, and upcoming U.S. economic data for clues about the Federal Reserve’s monetary policy outlook. The combination of a weaker dollar, rising oil prices, and elevated geopolitical risks has also strengthened demand for safe-haven assets, supporting gold prices as investors seek protection against potential market volatility and inflationary pressures.
Market Watch
Iran Threatens the United States with New Missiles
Iran has escalated its rhetoric toward the United States, threatening Washington with what it described as an “economic war” and further military measures, while announcing the use of an advanced ballistic missile against U.S. warships in the Gulf. The development has raised concerns over a broader escalation of the conflict in the region.
Iranian official Mohsen Rezaei said the United States had received a “clear warning” in recent days regarding Iran’s new missiles, warning that any economic war against Tehran would be met with countermeasures. These measures could include imposing a maritime exclusion zone in the Persian Gulf extending toward the vicinity of the U.S. blockade, as well as repositioning Iranian forces operationally toward U.S. ships and military bases.
Reports indicate that the missile referenced by Tehran is the Qassem Basir, a ballistic missile that Iran says has enhanced maneuverability and improved capabilities to penetrate missile-defense systems. Tehran also claims that the missile is equipped with a guidance system designed to operate despite electronic jamming. Iranian state media previously announced its first combat use during earlier attacks.
Meanwhile, the U.S. military said its warships had managed to evade Iranian missile attacks, as Washington continues to impose military and economic pressure on Tehran, including targeting Iranian oil tankers in recent days.
The escalation comes amid growing disruptions to shipping through the Strait of Hormuz, with commercial maritime traffic declining through the strategic waterway and concerns that a prolonged confrontation could disrupt global oil and gas supplies. Under normal conditions, roughly one-fifth of global oil and liquefied natural gas shipments pass through the strait, making any threat to maritime traffic a key factor for energy prices.
At the same time, the Iran-backed Houthi group has launched attacks on several cities and economic facilities in southern Saudi Arabia, reportedly injuring dozens of people and raising further concerns that the conflict could spread across a wider regional area.
Continued tensions around the Strait of Hormuz and attacks on energy infrastructure could increase the geopolitical risk premium in oil prices, potentially adding to global inflationary pressures and affecting market expectations for the path of monetary policy, particularly if energy supply disruptions persist for an extended period.
Oil Prices Rise Amid Growing Concerns Over Supply
Oil prices continued to rise during Tuesday’s trading session, reaching their highest levels in several weeks as concerns over supply disruptions in the Middle East intensified. The ongoing tensions between the United States and Iran, along with growing risks to shipping and energy infrastructure in the region, have heightened uncertainty across global oil markets.
Brent crude futures rose by around 2.06% to approximately $99.00 per barrel by 08:00 GMT, after reaching an intraday high of $99.22, their highest level since July 24. Meanwhile, West Texas Intermediate (WTI) futures gained around 3.2% to $94.41 per barrel, after touching $94.60, their highest level since June 8.
The gains came amid growing concerns that the conflict in the Middle East could expand and disrupt global crude supplies. Iran-backed Houthi forces launched attacks on energy facilities in southern Saudi Arabia, while Tehran has threatened to retaliate against any further U.S. strikes on its assets, reinforcing the geopolitical risk premium in oil prices.
Markets are also closely monitoring developments around the Strait of Hormuz, one of the world’s most important oil transportation routes, as tanker traffic through the waterway has declined significantly. Estimates indicate that oil shipments from Middle Eastern producers have fallen to around 11 million barrels per day, compared with approximately 18 million barrels per day before the war with Iran began.
Although some shipments continue to pass through the strait, the decline in tanker traffic and the use of alternative export routes by some Gulf producers have increased uncertainty in the market. At the same time, higher production from the United States, Canada and Guyana, together with weaker global demand, has helped limit the rise in prices and prevented Brent crude from sustainably surpassing the $100-per-barrel threshold.
Amid continued geopolitical risks, Goldman Sachs has raised its forecasts for Brent and WTI prices, assuming that shipping disruptions in the Middle East could persist into 2027. Analysts expect prolonged supply disruptions to keep oil prices elevated in the coming months, particularly if disruptions spread to additional production facilities or major export routes.
A sustained rise in oil prices could add to global inflationary pressures, particularly in energy-importing economies, while also affecting market expectations for interest rates if the energy shock causes inflation to remain elevated for longer than anticipated.
Dollar Falls Toward Two-Week Low
The U.S. dollar fell during Tuesday’s trading session, approaching its lowest level in nearly two weeks, as the Japanese yen strengthened and demand for the greenback weakened. Investors are also awaiting U.S. inflation data due later this week for fresh signals on the Federal Reserve’s monetary policy path.
The U.S. Dollar Index (DXY), which measures the performance of the U.S. currency against a basket of six major currencies, fell to around 98.8, reaching its lowest level in more than two weeks during Asian trading before stabilizing near 98.84. The decline marked the index’s second consecutive daily drop.
The dollar came under particular pressure from the Japanese yen, which climbed to its strongest level in seven months against the U.S. currency amid growing expectations that the Bank of Japan could raise interest rates at a faster pace. The dollar fell to around 152.89 yen, while the yen gained roughly 4.5% from levels near 160 yen per dollar recorded the previous week.
Currency markets are also focused on the release of the U.S. Producer Price Index (PPI) on Thursday and Consumer Price Index (CPI) on Friday. The data could play a key role in shaping market expectations for the Federal Reserve’s upcoming September meeting. Current market pricing suggests roughly a 60% probability of a U.S. rate hike this month following stronger-than-expected August employment data.
The latest U.S. jobs report showed that employers added 162,000 jobs in August, well above expectations of 56,000, while the unemployment rate remained at 4.1%. The figures initially strengthened expectations for tighter U.S. monetary policy and provided support for the dollar.
Meanwhile, expectations of tighter monetary policy in Japan have increased the yen’s appeal and encouraged investors to unwind yen-funded carry trades, generating additional demand for the Japanese currency and putting further pressure on the dollar.
The dollar is also facing uncertainty from geopolitical developments in the Middle East. Although escalating tensions between the United States and Iran can sometimes support the dollar as a safe-haven asset, rising oil prices could increase inflationary pressures and complicate central banks’ decisions over interest rates.
The dollar is expected to remain sensitive to U.S. inflation data and any new signals from Federal Reserve officials in the coming days, alongside developments in Japanese monetary policy. A higher-than-expected inflation reading could support the dollar by strengthening expectations for tighter monetary policy, while weaker-than-expected data could increase downward pressure on the U.S. currency.