US-Iran Conflict Sparks Bearish Pressure on Gold Futures

The ongoing US-Iran conflict has led to rising energy prices and trade shocks, prompting market expectations of tighter monetary policy. As a result, swaps markets are now pricing in a near-certainty of an interest rate hike at the Federal Reserve's September meeting.

Gold futures have been trading in a narrow range, with Friday's opening price at $4,050 after testing a day's high at $4,072.97 and a low at $4,024.20. The precious metal is trying to defend its immediate support at $4,042.80, but a breakdown could trigger a sell-off before the week's close.

On the weekly chart, gold futures have tested the week's high at $4,171.40 and low at $3,986.50, signaling extensive bearish pressure. The 9 EMA has pierced the 50 EMA, forming a 'bearish crossover', which could complete a 'bearish hammer' pattern.

The recent jump in crude oil prices to over $100 a barrel and new import tariffs have reinforced fears of sticky inflation, leading to expectations that the Federal Reserve will consider raising interest rates again in September. The central banks are taking a measured approach to the renewed surge in energy prices, but markets may continue to be volatile if the US-Iran conflict escalates.

Friday's closing level of gold futures and the outcome of the Fed's meeting on July 27-28 will provide crucial clues on the further directional trend. If gold futures close below $4,000, weakness could persist during the upcoming week, despite wobbly moves till the Fed meets.