Gold Prices Rebound Amid Escalating Middle East Tensions
Gold prices have bounced back after hitting one-week lows near $4,350 on Wednesday, but buyers remain cautious amid escalating tensions in the Middle East. The widening conflict has kept oil prices elevated and inflation concerns alive, bolstering expectations for more than one Federal Reserve interest rate hike this year.
The US Central Command said it destroyed five Iranian crude oil carriers on Tuesday, which it called a response to Iran's Islamic Revolutionary Guard Corps targeting a US Navy warship with ballistic missiles twice over the previous two days. Meanwhile, China's inflation came in hotter-than-expected at 0.8% year-over-year in August.
TD Securities expects core inflation to see some relief in Q3 but anticipates that risks are skewed to the upside given assumptions about large price declines in tariff-exposed goods categories. The bank projects that core CPI rose 2.3% on a y/y basis, down 10 bps vs July, while headline inflation likely stayed unchanged at 3.4% y/y.
On the technical side, gold remains exposed to two-way risks as it holds in a neutral but slightly constructive stance above the 50-day and 100-day simple moving averages (SMAs) but capped beneath the 21-day SMA near $4,462 and the longer-term 200-day SMA around $4,537.