Saudi pipeline in flames: Brent surges past $108 as gold hunts for a floor

Strait of Hormuz and the Saudi pipeline: a two-front energy shock

Brent is trading at $108.00 a barrel this morning, WTI around $103 — the sharpest one-day jump in weeks, after a weekend that markedly worsened the physical supply picture in the Gulf.

A drone strike damaged Saudi Arabia’s East-West pipeline, the country’s key alternative export route that bypasses the Strait of Hormuz entirely and normally carries some 4-5 million barrels per day toward the Red Sea. Reuters reports that reserves at the Yanbu terminal would cover only around 5-7 days of exports if the pipeline stays offline, and estimates the outage alone could threaten close to 4% of global oil supply.

The picture worsened further on Sunday, when a commercial vessel was struck inside the Strait of Hormuz, killing one crew member and injuring four. Iran responded by postponing planned talks with Gulf states in Oman that were meant to secure a safe shipping corridor — a diplomatic channel that could have eased the pressure is instead being pushed further away. Adding to the squeeze, Houthi forces have expanded control to the island of Perim near the Bab el-Mandeb strait and warned of further attacks on Saudi shipping, forcing some tankers toward a Cape of Good Hope detour that adds roughly 22 days to the voyage. Tanker rates have already hit record levels.

Gold stuck between geopolitics and a hawkish Fed

Gold (XAU/USD) has slipped to $4,328 this morning, losing the $4,350 level under pressure from rising yields and a firmer dollar, and is now testing the $4,300-$4,330 demand zone.

Friday’s US CPI print came in hot at +3.4% year-on-year, with core inflation at +0.3% month-on-month. Combined with oil back above $100, that has handed the Fed a clear case for a hike at this week’s meeting: according to Reuters, the probability of a 25bp increase on September 15-16 jumped over the weekend from roughly 70% to 86-87%. Both Goldman Sachs and J.P. Morgan revised their calls toward a September hike over the weekend, with J.P. Morgan also penciling in a further move in December. Futures now price close to 90bp of cumulative tightening through the second half of 2026.

The 10-year Treasury yield is approaching the psychological 5% level and the 2-year sits near 4.61%, up some 26bp on the week. The dollar index, however, is only modestly firmer near 99.2 — a sign that simultaneous tightening from other major central banks (the ECB hiked last week, the BoJ is expected to move on Friday, roughly 76% priced) is capping the dollar’s usual advantage even as the Fed turns more hawkish. For gold, that is one of the few genuinely supportive threads in an otherwise difficult tape.

Wednesday’s FOMC is the pivot point

Wednesday’s rate decision itself may matter less than what comes with it. Fed Chair Kevin Warsh’s press conference and the updated dot plot will decide whether markets treat a September hike as a one-off insurance move against the energy shock, or the start of a longer tightening cycle.

A hike paired with a dovish message from Warsh could trigger a classic “sell the rumor, buy the news” reaction in the dollar and real yields, letting gold push back toward $4,400 and beyond even after the rate increase. A hike paired with a genuinely hawkish dot plot, on the other hand, would keep real yields elevated and extend the current pressure on XAU/USD. Either way, this week’s price action is less a trade on the war itself and more a trade on how the Fed chooses to respond to it.

Central banks and ETFs keep buying even as sentiment turns cautious

Asian equities softened overnight as rising oil prices combined with renewed concern about AI-related valuations in Japan and South Korea. It is not yet a classic panic — the credit system shows no signs of stress and investors still have short-dated Treasuries, the dollar and the yen as alternatives — but the market is edging closer to a stagflationary setup where oil, inflation and rate expectations all move in the same uncomfortable direction at once.

Underneath the daily volatility, structural demand for gold keeps building. The World Gold Council reports that central banks added a net 23 tonnes in July, led by China (+20t), Poland (+8t) and the Czech National Bank (+2t) — the PBoC’s 21st consecutive month of purchases. August was even stronger on the investment side: global gold ETFs pulled in $18 billion, the second-largest monthly inflow on record, lifting holdings by 121 tonnes to a record 4,189 tonnes and AUM by 16% to $615 billion, with Europe alone contributing a record $7.9 billion.

Market impact - today’s trading-day summary

Gold XAU/USD is at $4,328 and Brent at $108.00.

Level	Zone
Resistance 2	$4,480 – $4,500
Resistance 1	$4,370 – $4,400
Key pivot	$4,350
Support 1	$4,300 – $4,330
Macro support	$4,230 – $4,285

The picture this morning is bearish-leaning for gold below $4,400, but with extremely high event risk into Wednesday’s FOMC. Geopolitics remains clearly bullish, and central-bank buying plus record ETF inflows support demand over the medium term — but a hawkish Fed and rising real yields could extend the slide in the short run. A daily close below $4,300 would open the way to $4,275-$4,285 and then $4,230-$4,250; above $110 on Brent puts the $110-$112 zone in view for oil.

Scenario odds: 30% bullish, 25% neutral, 45% bearish.

This report is prepared by the An Infinity Original team as a daily overview of market and geopolitical developments, based on publicly available sources and market data at time of publication. It is for informational and analytical purposes only and is not financial advice. Trading in financial markets carries a high risk of capital loss.