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Gold and Oil in Focus as US-Iran Tensions Rise Over Strait of Hormuz

Oil prices are again on the rise on Monday causing a domino effect throughout the trading markets. As oil prices, bond yields and expectations of interest rate hikes rise, Gold and the US stock market decline. Higher oil prices are primarily due to the US decision to reject the Iranian proposal for the Straits of Hormuz. Crude oil prices have risen 1.85% during this morning’s Asian session. The increase is not taking the price to a new high but is reducing the possibilities of a longer-term bearish trend. However, the most volatile asset this morning is among the metals market. Gold (XAU/USD) - Bond Yields and a Strong Dollar Significantly Reduce Gold’s Demand Gold and other metals are struggling to compete for demand while the US Dollar Index again rises above 100.00 and while bond yields again trade close to a two-decade high. Of particular concern are bond yields, which now trade comfortably above 5.00%. As a result, Gold, a non-yielding asset, becomes particularly unattractive. The US 10-year Bond yields are trading 28 points higher on Monday and are trading at 5.210%, close to 2026’s highs. The US Dollar is also currently the best-performing currency of the day and is trading 0.20% higher, applying pressure on Gold. Currently, all metals are trading lower, with Silver trading the lowest and Copper experiencing the weakest decline. Silver - 4.31% lower Palladium - 3.65% lower Platinum - 3.33% lower Gold - 2.45% lower Copper - 1.55% lower As oil prices continue to rise and the economy remains resilient, the possibility of an interest rate hike on October 28th increases. Currently, 68% of the market believes the Federal Reserve will hike. This is higher than the 64% on Friday and 57% from last Monday. With inflation and the US Dollar remaining elevated, while bond yields stay above 5%, conditions remain challenging for Gold. Under these conditions, a new bullish trend may remain difficult. However, if the economic data starts to deteriorate due to these conditions, Gold can rise as a safe-haven asset and US-based assets are deemed a higher risk.

HFM - Gold 30-Minute Chart Gold is witnessing a clear bearish signal from indicators using price direction and momentum. These include crossovers, the VWAP and price action. However, most oscillators are indicating the price of Gold is oversold for the day and has deviated too fast away from its average price. For this reason, the bias remains bearish, but oversold. Crude Oil Rises Reduces Hopes For Weakening Inflation Tensions between the US and Iran remain high after President Donald Trump rejected Iran’s seven-day proposal to reopen the Strait of Hormuz. Iran says it will not soften its conditions, which include easing oil sanctions, releasing frozen Iranian assets and lifting the US naval blockade. However, both sides have indicated that diplomacy remains possible, with Trump saying he expects indirect negotiations to continue this week. Nonetheless, the continued standoff keeps uncertainty high and could maintain volatility in global oil and financial markets. Crude Oil is not yet witnessing indications of a new bullish trend, but is seeing bearish signals weaken. S&P 500 - US-China Deal Helps Offset Broader Market Pressures The S&P 500 is trading lower on Monday, as are most global indices. All US, UK and Japanese indices are trading lower while European indices edge slightly higher. However, the VIX trades 0.85% higher, indicating a weak sentiment for the day so far. The global equity market comes under pressure from bond yields and expectations of interest rate hikes. If the Federal Reserve again adjusts rates in October, the Federal Funds Rate will rise to a 12-month high. However, technical analysis is not indicating a longer-term bearish trend, as the decline only forms a retracement. Also, the new US-China agreement to cut tariffs on more than 120 products boosts sentiment and can improve economic supply chains. Some of these products include cutlery, linen, electronics and meats. If the price rises above $7,738.40 bullish indications may arise while above $7,745.00 will see indications strengthen. However, if the price falls below $7,718.00, it will keep short-term bearish signals intact.

HFM - Crude Oil 30-Minute Chart Key Takeaways: - Oil remains supported by concerns over potential supply disruptions. - Gold sees a significant decline due to high bond yields, but may benefit from increased safe-haven demand if economic conditions deteriorate. - US-Iran tensions continue to influence market sentiment, and further developments could trigger increased volatility in both assets. - Stocks decline due to higher oil prices and bond yields, but find support from the US-China agreement to cut tariffs on more than 120 products.

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Publication date:

2026-09-28 10:28:58 (GMT)

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