The new week has begun with a sharp escalation in US–Iran hostilities, marking a second consecutive night of military exchanges across the Persian Gulf. The US launched fresh airstrikes on approximately 90 Iranian targets, while Iran retaliated against US military positions in Bahrain, Kuwait, and Qatar. This conflict has driven crude oil prices sharply higher, with WTI climbing above $75 a barrel and Brent pressing toward $79. Meanwhile, gold fell to a one-week low near $4,056 per ounce as safe-haven demand was offset by a stronger US dollar and rising Treasury yields. The 10-year yield held near 4.57%.
The key economic events later this week could further shape the market’s direction. Tuesday brings the US CPI report for June, with expectations of a decline to around 3.9%. A reading in line with forecasts could support a more dovish Federal Reserve stance, at least temporarily. Wednesday sees Chinese GDP growth (consensus 4.4%) and industrial production (expected 4.7%), along with US PPI data and the Bank of Canada’s rate decision. Thursday features the British GDP update. However, the eruption of conflict has shifted focus back to geopolitics and its implications for inflation and monetary policy.
Fed minutes from June revealed deep divisions among policymakers, with a few officials even open to a rate hike. The cancellation of the ceasefire by President Trump has revived hawkish expectations, with CME FedWatch showing a 50% probability of a rate increase in September. Bank of America slashed its 2026 average gold forecast by 14% to $4,360, citing a more hawkish Fed. From a technical perspective, WTI faces resistance at the 23.6% Fibonacci level near $76.45, while gold remains bearish below its key moving averages and the $4,311 resistance. Crude oil may see a mean-reversion toward the $76 area, while gold could consolidate in a triangle pattern ahead of next week’s CPI report, with a seasonal tendency for gains from mid-July offering some upside potential.
