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Today Fundamental Analysis: Oil prices open higher as US-Iran negotiations fail to reach a resolution
Oil prices jumped on Monday as tensions in the Middle East intensified after U.S. President Donald Trump rejected Iran’s proposal to reopen the Strait of Hormuz and resume talks. Brent rose 2.6% to $106.92, while WTI gained 1.7% to $94.12. Iran had offered to reopen the key shipping route within seven days if the US met conditions including ending military action and lifting economic restrictions. The rejection raised concerns that the conflict could continue and disrupt global oil supplies.
In the US market, stock futures fell in early trading today as rising oil prices and surging Treasury yields renewed concerns over inflation and further Fed rate hikes. Dow futures fell 0.4%, S&P 500 futures 0.4% and Nasdaq-100 futures 0.7%, despite strong gains across major indices last week.
Higher oil prices, driven by renewed Middle East tensions, are adding to inflation pressures, while the 10-year Treasury yield reached its highest level since 2007.
In Asia, China’s industrial profits rose 4.2% year-on-year in August, but growth continued to slow amid weak consumer demand and higher energy costs. Despite the slowdown, industrial earnings remain significantly stronger than last year, supported by the AI-driven boom in semiconductors.
Gold fell around 2% since the weekly open, dropping below the key $4,200 support as renewed US-Iran tensions pushed oil prices higher, reviving inflation concerns and strengthening the US dollar and Treasury yields. These factors, combined with rising expectations for another Fed rate hike in October, are weighing heavily on the precious metal.
Markets are pricing a 67% probability of an October hike, keeping the near-term outlook for gold under pressure. Investors will focus on developments in US-Iran talks, Middle East tensions, Fed officials’ comments and this week’s US labor-market data, culminating in Friday’s NFP report.
Gold buying by central banks has hit its highest rate since 2024.
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