Escalating tensions in the Middle East lifted international oil prices and raised risks of higher inflation and interest rates. Last night, spot gold consolidated near the $4400 threshold before sliding again to a low of $4345.82 per ounce, and finally closed at $4355.30 per ounce, down 1.12%. Spot silver settled at $65.682 per ounce, a drop of 0.59%.

Spot gold opened at $4355.62 per ounce during Wednesday’s ASIan session, hitting a low of $4341.23 per ounce. It edged higher in early trading and peaked at $4384.20 per ounce. At press time, gold was consolidating near $4376 per ounce, up 0.48% intraday.

The US Dollar Index traded weakly overnight and closed at 98.87, down 0.05%. The 2-year US Treasury yield rose 2.4 bASIs points to 4.397%; the 10-year yield fell 1.1 bASIs points to 4.792%; the 30-year yield climbed 0.4 bASIs points to 5.248%.

WTI and Brent crude rebounded from intraday lows overnight. WTI crude closed at $94.30 per barrel, up 1.67%; Brent crude settled at $99.33 per barrel, up 2.01%. US natural gas CFD closed at $2.902 per MMBtu, down 2.158%.

The three major US stock indices closed lower overnight. The Dow Jones Industrial Average fell 628.18 points or 1.18% to 52786.07. The S&P 500 dropped 44.98 points or 0.58% to 7673.62. The Nasdaq Composite declined 85.58 points or 0.32% to 26421.41.

Major European stock indices finished mixed. Germany’s DAX 30 rose 0.10% to 26007.89. UK FTSE 100 fell 0.05% to 10816.33. France’s CAC 40 gained 0.14% to 8317.98. Euro Stoxx 50 rose 0.14% to 6413.15. Spain’s IBEX 35 dropped 0.20% to 19981.54. Italy’s FTSE MIB edged down 0.08% to 52186.50.

Shanghai Gold Exchange’s Au(T+D) closed down 0.77% at 946.83 yuan per gram overnight, while Ag(T+D) fell 0.46% to 16119.0 yuan per kilogram. In early trading today, Au(T+D) dropped 1.24% to 942.29 yuan per gram, and Ag(T+D) was 0.95% lower at 16040.0 yuan per kilogram.

SPDR Gold Trust, the world’s largest gold ETF, cut its holdings by 1.426 tonnes from the previous session, with current holdings at 1050.63 tonnes. iShares Silver Trust, the world’s largest silver ETF, kept its holdings unchanged at 15339.36 tonnes.

Today’s central parity rates for the RMB in the foreign exchange market: USD/CNY at 6.7769, down 35 pips (RMB appreciation); EUR/CNY at 7.8397, down 22 pips; HKD/CNY at 0.86418, down 6.4 pips; GBP/CNY at 9.1308, down 41 pips; AUD/CNY at 4.8610, down 6 pips; CAD/CNY at 4.8867, up 58 pips; 100JPY/CNY at 4.3774, up 68 pips; CNY/RUB at 12.8163, up 65 pips; NZD/CNY at 3.9474, down 160 pips; CNY/MYR at 0.60135, up 28.5 pips; CHF/CNY at 8.3399, down 19 pips; SGD/CNY at 5.3304, up 17 pips.

Latest data released overnight: US August NFIB Small Business Optimism Index stood at 98.7, versus a prior reading of 99.8. US August New York Fed 1-Year Inflation Expectations came in at 3.58%, compared with 3.63% previously.

Middle East tensions flared up again. Iran’s military warned it would target tankers at Gulf ports, and Houthi forces struck Saudi energy facilities, sending oil prices higher for two straight days. Rising oil prices and stronger-than-expected jobs data last week boosted bets for Fed rate hikes and lifted US Treasury yields. Analysts estimate that even if the Fed keeps rates unchanged next week, two rate hikes may occur in December and March next year.

Reports said foreign ministers of 12 countries including France, Britain, Canada, Denmark, Finland, Iceland, Ireland, Norway, Poland, Portugal, Spain and Sweden issued a joint statement, planning to restrict trade in goods originating from illegal settlements in the West Bank. Israel must immediately halt settlement expansion and the extension of civil administrative powers, and ensure accountability for settler violence.

Iran’s military stated that in response to US military aggression and malicious harassment against Iranian oil tankers and vessels, Iranian forces attacked two US destroyers armed with cruise missiles and Aegis systems. It warned all tankers anchored at ports and anchorages in Kuwait and Bahrain to evacuate, or they would become targets. Iran also said its armed forces have full control over the Strait of Hormuz.

Sources said the US military launched a new round of strikes against Iranian oil tankers and Kharg Island, Iran’s main oil export hub, to retaliate against Iran’s successive attacks on US naval vessels. Jordan’s armed forces reported missile attacks originating from Iranian territory in the past few hours.

Russian President Vladimir Putin held a phone call with US President Donald Trump. Trump focused on efforts to end the Ukraine conflict as soon as possible. Putin backed the idea of restoring Russia-US relations. The two discussed prisoner exchange matters, and Putin told Trump what steps the US could take to end the conflict faster. Putin stated Russia has no hostile plans toward Europe.

On the daily chart, gold has fallen for three consecutive days but found support near the 100-day moving average. It is now consolidating between the 5-day and 100-day moving averages. Daily indicators show the MACD positive histogram keeps shrinking, while the RSI hovers around the 48 level.

On the 1-hour chart, gold rebounded from the lower BOLLinger Band to consolidate near the middle band. Short-term moving averages EMA5 and EMA10 turned up and intertwined. The MACD negative histogram gradually shrank and RSI rose to around 44. For intraday short-term trading, expect consolidation within $4340‑4400. A breakout higher would target $4410‑4420 or near $4435; a breakdown lower would aim for $4325‑4315 or around $4310.

Key economic data and events to watch today:

14:45 France July Industrial Output MoM

20:15 US ADP Employment Change for the week ending August 22

23:00 US Treasury announces maximum amount for bond buyback programme

00:00 next day EIA releases Monthly Short-Term Energy Outlook report

01:00 next day ECB President Lagarde delivers speech

01:00 next day US 10-Year Treasury Note Auction High Yield (for 9 September)

01:00 next day US 10-Year Treasury Note Auction Bid-to-Cover Ratio (for 9 September)

04:30 next day US API Crude Oil Inventories for the week ending September 4

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