Gold rose on Wednesday, erasing the previous session’s losses, trading above the key level of $4,400. The yellow metal is now looking to maintain trading above the daily pivot point of $4,388 to test resistance levels at $4,444 then $4,483. On the downside, if the price falls below the uptrend line on the four-hour chart, it may touch support levels near $4,330 then $4,285.
Financial markets are facing heightened volatility as escalating tensions in the Middle East continue to reshape expectations across global asset markets. Oil prices are approaching the $100-per-barrel threshold, fueled by concerns over potential disruptions to energy supplies, while renewed Houthi attacks on Saudi cities have further intensified geopolitical risks. At the same time, the U.S. Dollar Index remains under downward pressure, as investors assess shifting expectations for global monetary policy and await key U.S. inflation data that could influence the Federal Reserve’s next interest-rate decision.
Market Watch
Houthis Attack Saudi Cities and Injure 73 People
The Houthis launched drone and missile attacks on four cities in southern Saudi Arabia on Tuesday, September 8, in what was described as one of the largest attacks against the Kingdom since the outbreak of the US-Israeli war with Iran in February.
According to Saudi sources and media reports, the attacks targeted Abha, Khamis Mushait, Jazan, and Najran, striking civilian and economic sites, as well as an air base in Khamis Mushait. The attacks reportedly injured 73 people, including women and children, while fires broke out at several energy facilities and some operations were temporarily suspended.
Reports indicated that oil facilities in Jazan, Abha, and Najran were among the sites targeted, with damage and fires reported at some locations. The attacks come amid escalating regional tensions linked to the conflict between the United States and Iran, raising concerns over the security of global energy supplies and maritime traffic in the Red Sea and Gulf.
Saudi authorities described the attacks as a serious escalation and pledged to take measures to deter similar attacks in the future. Saudi Arabia also announced on Wednesday that it had lifted a security alert in Khamis Mushait following an assessment of the situation after Tuesday’s attacks.
The Houthis, meanwhile, said the attacks were carried out in response to Saudi military escalation in Yemen, amid renewed fighting between the two sides following years of relative calm after the UN-brokered truce in 2022. The return of attacks has raised concerns that the Yemeni conflict could expand into another front amid the broader regional tensions.
Oil Heads Toward $100 as Middle East Tensions Escalate
Oil prices continued to rise during Wednesday’s trading session, moving toward the $100-per-barrel level as escalating military tensions in the Middle East renewed concerns over potential disruptions to crude oil supplies from the region.
Brent crude rose around 2.2% to $100.07 per barrel by 07:21 GMT, briefly surpassing the $100 threshold for the first time since July 24, before easing slightly to around $99.93. Meanwhile, U.S. West Texas Intermediate (WTI) crude gained approximately 1.8% to $94.73 per barrel.
The sharp increase came amid escalating fighting in the Middle East, particularly following attacks by Iran-backed Houthi forces on energy facilities in Saudi Arabia. The attacks reportedly caused fires at some facilities and heightened concerns that the conflict could spread further, potentially affecting oil shipments through the Red Sea.
Concerns in energy markets have also increased over continued disruptions in the Strait of Hormuz, one of the world’s most important oil transit routes, where crude flows have declined sharply in recent weeks. The Red Sea remains another important route for some oil shipments, making attacks on energy infrastructure or shipping lanes an additional factor supporting prices.
Brent prices have risen by approximately 25% since the beginning of August, as hopes for a lasting resolution to the U.S.-Iran conflict have weakened and geopolitical risks remain elevated. Against this backdrop, several major banks, including Goldman Sachs, Bank of America, and HSBC, have raised their oil-price forecasts for the coming period.
Investors are also closely monitoring the impact of higher energy prices on global inflation and monetary policy. A sustained increase in crude prices could raise transportation and production costs and add to inflationary pressures, particularly if concerns over oil flows from the Gulf region persist.
Dollar Index Under Negative Pressure Amid Yen Strength and Rate-Cut Expectations
The U.S. Dollar Index (DXY) came under downward pressure during Wednesday’s trading session, hovering near a two-week low as the Japanese yen strengthened and the euro gained ground. Investors are also awaiting U.S. inflation data due on Friday for clearer signals on the Federal Reserve’s monetary policy path.
The Dollar Index fell by around 0.2% to 98.63, while the Japanese yen continued to strengthen against the U.S. dollar, trading at approximately 153.05 yen per dollar after approaching a seven-month high. The yen’s gains reflect growing expectations that the Bank of Japan could raise interest rates, putting additional pressure on the dollar against the Japanese currency.
Meanwhile, the euro rose around 0.18% to $1.1641, approaching a two-week high ahead of the European Central Bank’s meeting on Thursday. Markets are closely monitoring the meeting amid expectations that inflationary pressures stemming from higher energy prices could influence the ECB’s monetary policy stance.
The dollar’s weakness comes despite concerns over surging oil prices, which have moved above the $100-per-barrel level amid escalating tensions in the Middle East. Higher energy prices could add to inflationary pressures and potentially encourage the Federal Reserve to maintain a more hawkish stance, limiting the dollar’s downside. However, investors are focusing on Friday’s U.S. inflation figures as a key indicator for interest-rate expectations.
Markets are also looking ahead to the Federal Reserve’s meeting next week, with inflation and labor-market data, alongside developments in oil prices, expected to influence policymakers’ decisions on interest rates. Recent currency movements highlight continued uncertainty in financial markets, as monetary-policy expectations and geopolitical tensions remain key drivers of the dollar’s direction.