- Oil and gold prices climbed as geopolitical tensions increased ahead of U.S. inflation data.
- Gold is holding near a two-month high as equities slip and oil rallies.
- U.S. crude rose 0.89% to $83.94 a barrel, while Brent advanced to $89.60 per barrel, up 0.78% on the day.
- North American equities closed softer after last week’s record levels.
- Geopolitical tensions are impacting market sentiment, with analysts noting a lukewarm market atmosphere ahead of the U.S. CPI data.
- Iran's commitment to govern the Strait of Hormuz is contributing to the risk for oil prices.
- Wednesday's CPI data is expected to show consumer prices edging up 0.1% in July after a decline in June.
Gold prices are holding near a two-month high as geopolitical tensions and rising oil prices create a cautious market atmosphere ahead of the U.S. Consumer Price Index (CPI) data release. Spot gold was trading at $4,387.03 an ounce, reflecting a 0.46% increase.5
Oil prices also surged, with U.S. crude rising 0.89% to $83.94 a barrel and Brent crude advancing 0.78% to $89.60 per barrel. This uptick follows a significant jump of about 5% on Monday, marking the highest closes since July 31.
Market analysts, including Kyle Rodda from Capital.com, noted that “Market sentiment is lukewarm amidst lingering geopolitical risk” as investors await the CPI data. The upcoming report is expected to show a 0.1% increase in consumer prices for July, following a 0.4% decline in June, with annual inflation forecasted to slow to 3.4% from 3.5%.
Geopolitical risks, particularly in the Strait of Hormuz, continue to influence market dynamics. The U.S. military's recent actions and Iran's firm stance on controlling the waterway have kept oil prices elevated, impacting inflation expectations and gold's appeal as a safe haven.
As traders position themselves ahead of the CPI report, gold's next resistance level is between $4,360 and $4,380, with a potential target of $4,500 if bullish momentum continues. Conversely, a break below $4,350 could signal deeper declines.
“Spot gold gained 0.46% to $4,387.03 an ounce, while U.S. crude rose 0.89% to $83.94 a barrel. The Strait of Hormuz remains the main geopolitical risk premium, with Iran doubling down on its commitment to govern the waterway.”
KITCO
