Gold fell on Wednesday after failing to break above the downtrend line on the four-hour chart. The yellow metal is currently trading near the first support level of $4,300; if it breaks below this level, it could continue to decline toward the next support level at $4,265. On the upside, if the price rises above the aforesaid trend line, it may test resistance levels near $4,387 then $4,421.
Global financial markets remained focused on the U.S. dollar and monetary policy as investors assessed rising geopolitical tensions and shifting expectations for interest rates. The dollar held near a two-month high, supported by expectations of tighter monetary policy, while Federal Reserve officials signaled concerns over persistent inflation. At the same time, President Donald Trump’s comments on Iran and the possibility of a diplomatic agreement added another layer of uncertainty to markets, particularly through potential effects on energy prices and global risk sentiment.
Market Watch
Trump Threatens to “Eliminate” Iran While Hinting at a Possible Deal Soon
U.S. President Donald Trump threatened to eliminate the Islamic Republic of Iran if no agreement is reached to end the war, while also signaling that a diplomatic settlement with Tehran could be possible in the near future.
During his address to the United Nations General Assembly in New York, Trump said he faced a decision over whether to pursue an agreement that would allow Iran to rebuild its economy or take a more forceful military approach against the Islamic Republic.
At the same time, Trump adopted a more conciliatory tone toward negotiations, saying that talks between the United States and Iran were continuing and that he believed a settlement would eventually be reached. He indicated that communications between the two sides had continued into Tuesday and that the relationship was developing.
Trump’s remarks came amid intensified diplomatic activity on the sidelines of the U.N. General Assembly, with U.S. and Iranian officials holding indirect talks through intermediaries. U.S. special envoy Steve Witkoff said negotiations had continued for several hours, with mediators moving between the U.S. and Iranian delegations, describing the discussions as constructive and encouraging.
One of the key issues in the negotiations is the Strait of Hormuz, a critical route for global oil shipments. An Iranian senior official told Reuters that Tehran was prepared to reopen the strait within seven days if Washington eased military pressure and lifted the blockade on Iranian ports. The official also said Iran had conveyed a proposal to the United States through intermediaries on September 16.
The latest developments point to a parallel diplomatic track alongside the military escalation. However, significant disagreements between Washington and Tehran remain, particularly over Iran’s nuclear program, military pressure, sanctions and freedom of navigation through the Strait of Hormuz.
Dollar Holds Near Two-Month High
The U.S. dollar held near a two-month high on Wednesday, supported by expectations that interest rates could remain elevated, while investors continued to monitor developments surrounding the war in the Middle East and diplomatic efforts to resolve the conflict.
The U.S. Dollar Index, which measures the greenback against a basket of six major currencies, rose around 0.16% to 100.71 in recent trading after reaching a two-month high earlier in the session. Meanwhile, the euro fell to $1.14282, its lowest level since late July, while the British pound stood at around $1.3316.
The dollar has been supported by expectations of higher interest rates, after Federal Reserve officials indicated that further rate increases could be considered if inflation fails to ease. These expectations come amid higher energy prices linked to the conflict in the Middle East, raising concerns that inflationary pressures could persist.
Kieran Williams, head of Asian FX strategy at Intouch Capital Markets, said the dollar’s support from interest-rate expectations appeared sustainable. However, he noted that markets are already pricing in more monetary tightening than the Federal Reserve’s projections suggest, meaning the dollar may need stronger economic data to sustain its gains.
Meanwhile, oil prices declined as hopes for a diplomatic breakthrough in the Middle East increased, particularly amid the United Nations General Assembly meetings. Brent crude futures fell to around $98.46 a barrel, as reports suggested that the Strait of Hormuz could potentially be reopened, which could ease concerns over global oil supplies.
Investors are also closely watching the Japanese yen, which traded at around 157.58 yen per dollar, amid continued concerns that Japanese authorities could intervene in the foreign exchange market to support the currency.
Fed’s Collins: “I Support Raising Interest Rates”
Susan Collins, President of the Federal Reserve Bank of Boston, said she supported the U.S. central bank’s decision to raise interest rates last week, citing increased risks that inflation could remain above the Federal Reserve’s 2% target for longer than expected.
Collins said improvements in labor-market conditions give policymakers more room to focus on bringing inflation back to target. She added that somewhat tighter monetary policy may be necessary to ensure that inflation returns to 2% on a sustainable basis.
The Federal Reserve raised its target interest rate by 25 basis points last week to a range of 3.75% to 4.00%, marking its first rate increase in more than three years as policymakers sought to contain persistent price pressures. Economic projections from Fed officials also indicated the possibility of another quarter-point increase before the end of the year.
Collins said she saw a growing probability of scenarios in which inflation remains above 2%, noting that price pressures could persist because of supply-side shocks, including the effects of geopolitical tensions and higher energy costs.
At the same time, Collins did not specify whether she would support another rate hike at the next policy meeting. She is also not a voting member of the Federal Open Market Committee in 2026, although her views contribute to the broader debate over the future path of U.S. monetary policy.
Collins’ comments come as financial markets await further signals about the outlook for U.S. interest rates, particularly amid continued concerns over inflation and the potential impact of energy prices and geopolitical tensions on the U.S. economy.
Looking Ahead
Markets are awaiting the release of the U.S. Flash Manufacturing PMI and U.S. Flash Services PMI, key indicators that provide an early reading of business activity and economic conditions in the United States. Investors will closely examine the data for signs of changes in demand, employment, and price pressures, which could influence expectations for the Federal Reserve’s future monetary policy and the direction of the U.S. dollar.