ETO Markets Global Pulse: Gold Holds $4,400 as Hike Odds Fall

Market Review

According to ETO Markets monitoring, on August 17 (Monday), spot gold rose 0.93% to close at USD 4,416.43 per ounce. Prices briefly touched USD 4,428.87 per ounce during the session. US gold futures for December delivery also gained 0.8%, settling at USD 4,473.70.

On August 18 (Tuesday) during early Asian trading, spot gold edged higher and traded around USD 4,420 per ounce. A softer USD and cooling FED rate-hike expectations continued to support gold. However, the expiry of the US-Iran memorandum, renewed Middle East tensions, and a sharp rise in oil prices may keep short-term volatility elevated.

Global Headlines

Trump Threatens Bombing Over Oman

Trump said Iran should “raise the white flag” and formally surrender to end the nearly six-month US-Iran war. He said the core objective remains preventing Iran from obtaining nuclear weapons and confirmed direct communication with members of the IRGC through other channels. Trump also warned that the US would bomb Oman if it “interferes” with efforts related to the Strait of Hormuz.

US Iran Memorandum Window Expires

Trump said the US does not seek to extend the memorandum of understanding with Iran. The US and Iran released the formal text of the memorandum on June 17, pledging to negotiate and reach a final agreement within up to 60 days. On August 17, the negotiation window expired, while both sides still remain sharply divided over the Strait of Hormuz and other issues.

FED Hike Odds Fall Further

According to CME FEDWatch data, markets price a 65% probability that the FED keeps rates unchanged in September, while the chance of a cumulative 25bp hike stands at 35%. By December, the probability of no change is 32.8%, while the chance of at least one 25bp hike has fallen to 67.2%.

UK Japan Trim Treasury Holdings

US Treasury data showed that both the UK and Japan reduced their US Treasury holdings in June from May. Japan held USD 1.117 trillion in US Treasuries, down USD 26.4 billion from May. The UK held USD 939.9 billion, down USD 8.7 billion month on month.

Long Treasury Yields Hit Highs

The US 30-year Treasury yield rose nearly 6bp to 5.31%, the highest level since 2007. The 10-year yield traded around 4.72%. Last week, the high yield on the new 30-year Treasury auction reached 5.216%, the highest since 2001. Markets continue to watch fiscal deficits, inflation, and demand for long-dated bonds.

Japan Bonds Face Heavy Selloff

Japan‘s 10-year government bond yield briefly rose to 2.93%, the highest level in nearly 30 years. The yen again approached the weak level of 160 per USD, only two weeks after the US and Japan jointly intervened in the FX market. Investors remain focused on Japan’s fiscal outlook, weak yen pressure, and growth risks.

ETO Markets Analyst View (Spot Gold)

Spot gold maintains a further upside structure intraday and remains above the USD 4,400 level. If prices continue to hold above this area, bullish recovery momentum may extend, with the previous high zone becoming the next key resistance area.

If gold falls back below USD 4,400, short-term profit-taking and wider volatility may follow. Overall, gold is extending its strong rebound since early August, but Middle East tensions and oil price swings may continue to amplify intraday moves.

Markets are currently pricing the expiry of the US-Iran negotiation window, Strait of Hormuz risks, the oil price rally, and softer FED rate-hike expectations. Gold may remain in a high-level consolidation range in the short term.

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