Gold and Oil Surge as Middle East Tensions Rise; US FOMC and NFP Reports Loom
The reported death of Hamas leader Ismail Haniyeh in Iran, allegedly due to an Israeli missile strike, has significantly heightened tensions in the Middle East, raising the likelihood of imminent retaliatory actions.
In response, Iranian leaders have issued strong statements:
- President Masoud Pezeshkian has vowed that Iran will “make the occupiers (Israel) regret this cowardly act.”
- Supreme Leader Ayatollah Ali Khamenei has declared, “We consider it our duty to avenge his blood.”
These statements increase concerns about the potential for broader conflict in the region. The instability could have substantial effects on the oil market, given that regional disruptions often impact oil production and distribution. The situation remains highly volatile, with potential repercussions for global energy markets and international relations. Observers are closely watching for further escalation or diplomatic efforts to ease tensions.
In addition to the geopolitical developments, upcoming U.S. events and data could influence oil and gold prices. Later today, the FOMC meeting is expected to maintain current U.S. borrowing costs, though Fed Chair Jerome Powell might signal a path toward a rate cut in the September FOMC meeting. On Friday, the U.S. Jobs Report (NFP) is anticipated to show a slowdown in the labor market, with 175K new jobs added in July compared to 206K in June. Yearly average hourly earnings are expected to drop to 3.7% from last month’s 3.9%.
U.S. oil prices rose by over 2% in reaction to the news but remain within a multi-week downtrend. Recent weak economic data from China and concerns about a potential slowdown in the world’s second-largest economy have also pressured oil prices. China’s GDP growth slowed to 4.7% in Q2, down from 5.3% in Q1.
US Oil Daily Price Chart
Source: TradingView, prepared by FX4Today Team
Retail trader data reveals that 86.15% of traders are net-long on US Crude, with a long-to-short ratio of 6.22 to 1. The number of net-long traders has increased by 5.20% from yesterday and by 15.22% from last week. Meanwhile, net-short traders have decreased by 10.72% since yesterday and by 31.94% from the previous week.
Adopting a contrarian approach, the high percentage of net-long positions suggests that US Crude prices might continue to decline. The significant increase in net-long positions compared to both yesterday and last week reinforces a stronger bearish contrarian bias for Oil – US Crude.
Gold has retraced approximately half of its recent decline and is moving towards a previous resistance level at $2,450/oz. This level, which was breached in mid-July before the metal experienced a sharp drop and entered a multi-month trading range, is now in focus. Should tensions in the Middle East escalate further or if Jerome Powell adopts a dovish stance in tonight’s remarks, Gold could not only test this former resistance level but also approach the recent multi-decade high of $2,485/oz.
Gold Price Daily Chart
Source: TradingView, prepared by FX4Today Team
