US CPI Tops 4% for First Time Since 2023; Oil Extends Gains, Gold Drops Sharply

Market Wrap-up: US CPI Tops 4%, Stocks Tumble as Oil Extends Rally

Markets faced a dual headwind from elevated inflation data and rising geopolitical uncertainty during the previous session. US equities closed sharply lower, with the Dow Jones Industrial Average falling more than 950 points, or 1.87%. The S&P 500 declined 1.62%, while the Nasdaq Composite dropped 1.98% to 25,169.50.

Part of the broad based selloff reflected investor positioning ahead of SpaceX's highly anticipated IPO, which is expected to become the largest public offering in Wall Street history. At the targeted offering price of $135 per share, the company would be valued at nearly $1.8 trillion and could create approximately 4,000 new millionaires among SpaceX employees.

According to Reuters, subscription demand has reached four times the number of shares available. The strong interest contributed to weakness across US equities as capital rotated out of semiconductor and AI-related stocks ahead of the IPO scheduled for tomorrow.

On the geopolitical front, renewed airstrikes and increasingly hawkish rhetoric from President Donald Trump toward Iran raised concerns that tensions in the Middle East could escalate further.

Trump also stated that the US military had secretly escorted more than 100 million barrels of oil, equivalent to roughly one day's global oil consumption. According to his remarks, the operation helped stabilize crude prices in the short term, suggesting oil could otherwise have surged toward $250 per barrel rather than remaining in the current $85-$90 range.

Crude oil extended its rally during the session, with US WTI crude rising 2.07% to $90.03 per barrel, while Brent crude gained 1.8% to $93.10 per barrel. Gold also came under significant selling pressure, falling more than 4% to below the $4,100 level.

Meanwhile, the latest US CPI report showed consumer prices rising 4.2% YoY and 0.5% MoM, marking the highest annual inflation reading in three years. However, core CPI, which excludes food and energy prices, increased only 0.2% on the month and 2.9% on the year.

The data suggests that underlying inflation pressures remain relatively contained despite the energy driven rise in headline inflation. As a result, the US Dollar remained stable, with the DXY holding around the 100.00 level despite increased safe-haven demand.

Looking ahead, market focus will shift to US PPI and Core PPI data for further insight into inflation trends. Investors will also closely monitor the ECB's interest rate decision, with the central bank expected to raise rates by 25 basis points from 2.15% to 2.40%.

XAU/USD: Gold Price Drops Sharply as Inflation Concerns Fuel Higher-Rate Bets

Key takeaway:

Gold prices fell sharply on June 10 as escalating military tensions between the United States and Iran fueled concerns about persistent inflation and the possibility that the Federal Reserve may need to keep interest rates elevated for longer.

Since the US-Iran conflict reignited in late February, gold prices have declined by more than 20%.

According to the CME FedWatch Tool, markets are currently pricing a 67% probability of a Federal Reserve rate hike in December.

Technical Outlook:

Daily Bias: Bullish

Support: 4,021

Resistance: 4,186

WTI: Crude Oil Surges Above $90 on Escalating US-Iran Tensions

Key takeaway:

Oil prices rallied strongly on June 10 after US President Donald Trump delivered a series of hawkish remarks toward Iran, raising concerns that tensions in the Middle East could intensify once again.

Earlier, Trump warned on social media that Iran would "pay a price" for prolonging peace negotiations.

According to energy consultancy Rystad Energy, total oil supply disruptions since the conflict began are estimated at around 1 billion barrels. The firm also warned that an additional month of conflict could remove a further 350 million barrels from the market.

Technical Outlook:

Daily Bias: Bullish

Support: 90.10

Resistance: 93.30

DXY: US Dollar Holds Near 100 After US CPI Reaches Three Year High

Key takeaway:

The US Dollar Index remained stable despite rising geopolitical uncertainty in the Middle East following retaliatory actions between the United States and Iran that disrupted regional stability after the helicopter crash incident.

President Trump threatened a "very strong" response against Iran, accusing Tehran of deliberately delaying negotiations over a temporary peace agreement.

US CPI rose to 4.2% year-on-year in May, up from 3.8% in April, while core CPI edged higher to 2.9%.

Technical Outlook:

Daily Bias: Neutral

Support: 99.70

Resistance: 100.20

EUR/USD: Euro Steady Ahead of ECB Rate Decision

Key takeaway:

The euro traded steadily ahead of the ECB interest rate decision.

The ECB is widely expected to raise interest rates today as policymakers respond to the risk of second-round inflation effects amid elevated energy prices. If delivered, it would mark the central bank's first rate hike in three years.

Traders will closely assess the ECB's updated inflation and growth forecasts. Markets are currently pricing in three rate hikes for the remainder of the year.

Technical Outlook:

Daily Bias: Bullish

Support: 1.15052

Resistance: 1.15761

USD/JPY: Japanese Yen Climbs Toward 160.50 as Intervention Concerns Persist

Key takeaway:

The Japanese yen weakened to a six-week low near 160.50 amid growing speculation over potential government intervention.

Finance Minister Satsuki Katayama stated on Tuesday that authorities are closely monitoring developments in the foreign exchange market. She reiterated that Japan's stance remains unchanged and that policymakers stand ready to take decisive action if necessary to maintain market stability.

The Ministry of Finance continues to face a difficult timing dilemma, as intervening only days before the Bank of Japan is expected to raise interest rates could be interpreted by markets as a sign of policy urgency.

Technical Outlook:

Daily Bias: Bullish

Support: 160.39

Resistance: 160.70

Markets are currently being driven by a combination of rising energy prices and geopolitical risk. Escalating US-Iran tensions have pushed crude oil higher, lifting concerns that headline inflation could remain elevated and complicate the Fed's policy path. That backdrop pressured equities, while capital rotation ahead of SpaceX's historic IPO added another layer of selling pressure across semiconductor and AI stocks.

The US Dollar has remained resilient rather than rallying aggressively, as softer core inflation readings helped offset some of the safe-haven demand generated by geopolitical uncertainty. Gold, meanwhile, continues to face pressure from expectations that US rates may stay higher for longer despite ongoing geopolitical risks.

Attention now turns to US PPI and Core PPI data, which will provide the next test of whether inflation pressures are broadening beyond energy. The ECB rate decision will also be closely watched as traders assess how policymakers respond to rising energy costs and evolving inflation risks.

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