Geopolitical escalation pressures Gold, but the reaction is…

The current week in the financial markets has entered a new concerning phase. What began on Wednesday, July 8, as a single-day flare-up in the US–Iran conflict has evolved into a second consecutive night of military exchanges across the Persian Gulf — with larger-scale strikes, broader regional retaliation and sharp reaction in the markets. What happened: The US launched a fresh wave of airstrikes against approximately 90 Iranian targets, while Iran responded by targeting US military positions in Bahrain, Kuwait and Qatar. Oil surged nearly 5% on Wednesday and continued higher overnight. Gold fell to a one-week low near $4,056. Treasury yields held near 4.57% on the 10-year. Risk appetite has still not turned back.

The impact on oil

Markets seemingly are no longer pricing a one-day response — they are pricing the increased escalation cycle, as Crude oil has sharply reversed. Brent crude settled nearly 5% higher on Wednesday, reaching approximately $78 per barrel. WTI gapped above $75 in the NYMEX night session. By Thursday's Asian session, Brent was pressing toward $79. US Strategic Petroleum Reserve stocks remain at their lowest level since 1983. Trump declared the ceasefire "over", warned attacks "could get much worse", and renewed threats about Kharg Island — which handles roughly 90% of Iran's crude exports. He also acknowledged Iran had called and wanted a deal, though he questioned whether Tehran could honour one. [caption id="attachment_226844" align="aligncenter" width="1950"] WTI Crude (USOIL) — two-day escalation cycle, July 8–9, 2026. Source: Exness.com[/caption]

Gold gets under pressure

Gold (XAU/USD) fell to $4,056–4,066 per ounce — the lowest since July 1. Bank of America cut its 2026 average gold forecast by 14% to $4,360, as the Fed is expected to get more hawkish this year. Higher oil, a stronger dollar and rising real yields provide pressure for metals. [caption id="attachment_226843" align="aligncenter" width="1968"] XAU/USD — weekly low near $4,056, July 9, 2026. Source: Exness.com[/caption]

Fed minutes confirm division — hawkish tilt reinforced overnight

The FOMC June minutes revealed a deeply divided Committee. A few officials saw a case for raising rates in June. CME FedWatchtool currently shows a 50% probability of interest rate hike in September: this number has lowered after a weaker than anticipated NFP report, but after cancellation of the ceasefire between the US and Iran from president Donald Trump, the hawkish expectations have returned. [caption id="attachment_226845" align="aligncenter" width="2330"] Probabilities of different interest rates scenarios, July 9, 2026. Source: https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html[/caption]

Risk appetite has still not turned back

European stocks dropped, Gold and Oil have stabilized displaying a range-bound activity. VIX keeps near lows, while fear-and-greed index stays in the neutral zone.

News in focus for the week: 13-17 July, 2026

• Tuesday, July 14, 12-30 GMT: US CPI (June 2026) — key inflation publication.
• Tuesday, July 14, 14-00  GMT: Fed Chair Warsh Testimony
• Wednesday, July 15, US PPI, 12-30 GMT (June 2026)
• Friday, July 17, 14-00 GMT Michigan consumer sentiment index. 

Now let's turn to potential scenarios and trading ideas for the week ahead.

WTI Crude oil (USOIL)

USOIL may retrace back to 200-day moving average and stabilize around $76 price level as a part of regular mean-reversion activity. The escalation in the Middle East had boosted the price of Crude oil higher, and whether or not escalation would continue or not, Crude oil has a chance of getting back to its 200-day moving average (the $76 level) and above. [caption id="attachment_226842" align="aligncenter" width="2138"] USOIL, daily chart. Source: Exness.com[/caption]

XAUUSD

Gold had trimmed the decline having found support at $4040 price area despite the sharp pullback of crude oil and rising yields of 30-year bonds from the US. It reacts neutrally now to any external triggers. There’s a seasonal tendency of potential growth for Gold starting from mid July, and this may skew the probability of upward direction ahead of next week’s US CPI report, which may become a trigger for the move. Until then, the price may consolidate inside of the triangle as shown on the chart below [caption id="attachment_226841" align="aligncenter" width="2150"] XAUUSD, Daily chart. Source: Exness.com[/caption]