Gold prices remain under downward pressure, having declined on Thursday and continuing to move within a bearish channel on the four-hour timeframe. The yellow metal is currently trading below the channel’s upper line; if it manages to hold below it, the decline could extend toward support levels at $4,002 then $3,950. On the upside, if the price rises above the daily pivot point at $4,070, it could test resistance levels at $4,130 then $4,178.
Financial markets remained cautious on Thursday as escalating military exchanges between the United States and Iran fueled geopolitical uncertainty across global markets. Oil prices retreated after recent gains despite persistent supply concerns, while the U.S. Dollar Index hovered near a one-month low as softer U.S. inflation data strengthened expectations that the Federal Reserve could adopt a more cautious monetary policy stance. Investors are now closely monitoring both geopolitical developments and upcoming economic data for further direction across energy, currency, and broader financial markets.
Market Watch
U.S. and Iran Exchange New Strikes
The military confrontation between the United States and Iran intensified on Thursday as the U.S. Central Command (CENTCOM) announced a new wave of strikes targeting Iranian military sites that Washington said were being used to support attacks on commercial shipping in the Strait of Hormuz. The operation, according to U.S. officials, is part of broader efforts to degrade Iran’s military capabilities and safeguard international maritime routes.
In response, Iran announced that it had launched retaliatory drone and missile attacks against U.S.-linked military positions and interests across the region, describing its actions as a response to what it called “American aggression.” Iranian officials also warned that any further attacks on Iranian territory would be met with additional military retaliation, raising concerns over a broader regional conflict.
The latest escalation comes amid growing fears over the security of the Strait of Hormuz, one of the world’s most important oil transit chokepoints. The renewed exchange of attacks has fueled uncertainty in global financial markets and contributed to higher energy prices as investors assess the potential impact on oil supplies.
Meanwhile, diplomatic efforts to contain the crisis continue to face significant challenges. Washington maintains that its operations are aimed at limiting Iran’s military capabilities, while Tehran insists it will respond directly to any future attacks, increasing the likelihood that tensions will remain elevated in the coming days.
U.S. Dollar Index Holds Near One-Month Low
The U.S. Dollar Index hovered near its lowest level in a month on Thursday as weaker-than-expected U.S. inflation data reinforced market expectations that the Federal Reserve may adopt a more cautious approach toward monetary policy in the coming meetings.
U.S. Treasury yields declined following the release of inflation figures that pointed to easing price pressures, reducing the appeal of the U.S. dollar. Meanwhile, the euro strengthened to its highest level in nearly a month, while the British pound remained close to a two-month high against the greenback.
Despite ongoing geopolitical tensions in the Middle East, which typically support demand for the U.S. dollar as a safe-haven asset, investors remained primarily focused on U.S. economic data. Market participants viewed the softer inflation reading as providing the Federal Reserve with greater flexibility to keep interest rates unchanged in the near term. Lower oil prices from their recent highs also weighed on demand for the dollar.
The U.S. Dollar Index, which measures the greenback against a basket of six major currencies, stood at around 100.47, remaining close to its lowest level since June 18. Investors are now awaiting additional U.S. economic data in the coming days for further clues on the Federal Reserve’s policy path and the direction of the U.S. dollar.
Oil Falls Amid Escalating Political Tensions
Oil prices declined on Thursday, giving up part of their recent gains as investors assessed the impact of escalating political tensions in the Middle East alongside concerns over the outlook for global crude demand. The market remained cautious as the United States and Iran continued exchanging military strikes, although no significant disruptions to oil supplies have been reported so far.
Brent crude futures and U.S. West Texas Intermediate (WTI) crude both moved lower as traders took profits following a strong rally in recent sessions. Expectations of slower global economic growth also weighed on oil prices, while investors closely monitored developments that could affect energy supplies from the Middle East.
Despite persistent geopolitical risks, analysts noted that ample global oil supply and the absence of any direct disruption to exports from the region have helped limit the impact of the tensions on prices. Market participants continue to watch military and diplomatic developments closely, particularly around the Strait of Hormuz, through which nearly one-fifth of the world’s oil supply is transported.
Analysts expect oil prices to remain highly volatile in the coming days as uncertainty surrounding the Middle East crisis persists. Investors are also awaiting upcoming U.S. and Chinese economic data, which could provide further clues about the outlook for global energy demand.
Looking Forward
Markets are now awaiting the release of key U.S. economic data later today, including U.S. Retail Sales and Initial Jobless Claims, for further insight into the strength of consumer spending and labor market conditions. The reports are expected to play a significant role in shaping expectations for the Federal Reserve’s next policy moves, with stronger-than-expected readings likely to support the U.S. dollar, while weaker data could reinforce expectations for a more cautious monetary policy stance.