Middle East Tensions Lift Inflation Expectations, Gold Rebounds After Breaking $4,350
1. Gold Rebounds to Near $4,370 After Bottoming Out
During the Asian session on September 9, spot gold staged a rebound following a sharp decline in the preceding session. As of around 10:00 Beijing time, gold was trading at $4,369.20/oz, up $13.50 or 0.31% intraday, having opened at $4,361.80, with an intraday high of $4,378.19 and a low of $4,341.34.
Gold dropped by approximately 1.15% in the prior session, hitting an intraday trough of $4,345.69 before closing near $4,355. Prices extended their retreat early Wednesday to probe $4,341 before fresh dip-buying pushed gold back above $4,360. However, on the 1-hour chart, the MA30 remains around $4,384, indicating that gold has not yet fully recouped its prior losses.
2. Middle East Geopolitical Conflict Escalates Again
A key driver behind this round of gold weakness remains the impact of Middle East tensions on global energy prices.
Yemen's Houthi forces recently launched strikes on energy facilities in southern Saudi Arabia, impacting several sites and elevating regional tensions. Simultaneously, military confrontations between the U.S. and Iran near the Strait of Hormuz persist. U.S. officials stated that American forces destroyed several Iranian transport vessels following repeated actions targeting U.S. warships.
Iran subsequently announced retaliatory measures against related U.S. facilities in Jordan and indicated further adjustments to shipping protocols in the Strait of Hormuz. Commercial vessel traffic through this vital maritime chokepoint remains noticeably below normal historical levels, keeping global energy supply disruptions in the spotlight.
3. Rising Energy Prices Reinforce Inflation Concerns
Following regional escalations, two primary international energy benchmarks climbed to six-week highs, with one briefly nearing the $100 mark intraday.
Sustained upward momentum in energy costs has prompted markets to reassess forward U.S. price pressures. With August non-farm payrolls adding a robust 162,000 jobs and the unemployment rate holding at 4.1%, labor market resilience had already bolstered expectations for a September Fed rate adjustment.
Consequently, U.S. Treasury yields hovered at elevated levels, with the 2-year yield rising to approximately 4.39% and the 10-year approaching 4.80%. Elevated yields increase the opportunity cost of holding non-yielding bullion, serving as a primary macro headwind pulling gold down from above $4,500.
4. China's Gold Reserves Expand for the 22nd Consecutive Month
Amid short-term price headwinds, central bank purchases remain resilient. Latest official figures show that China's gold reserves reached 76.73 million ounces at the end of August, an increase of 650,000 ounces from July, marking the 22nd consecutive month of reserve growth.
Continuous official allocation provides solid structural demand in the $4,300 to $4,400 region. The consistent emergence of dip-buying following sharp pullbacks highlights the simultaneous tug-of-war between short-term monetary headwinds and medium-to-long-term institutional demand.
5. U.S. PPI and CPI Releases Take Center Stage
Market focus will now converge on upcoming U.S. August inflation metrics. According to the Bureau of Labor Statistics schedule, August PPI will be released on September 10, followed by August CPI on September 11, both set for 8:30 AM EDT (20:30 Beijing time).
In July, headline CPI rose 3.4% year-over-year while core CPI rose 2.5%. Whether inflation figures re-accelerate this week will directly dictate market expectations for the September FOMC meeting.
At present, gold has recovered from $4,341.34 to $4,369.20. Short-term overhead resistance lies first at $4,380 to $4,400, while downside focus remains on $4,340 and $4,300. The PPI and CPI prints will prove critical in determining whether gold can reclaim and sustain levels above $4,400.