Riyadh in Flames: Trump Weighs Strike on Iran as Oil Slides

Monday opens the trading week with commodity desks digesting a volatile weekend of geopolitical headlines as European liquidity enters the market. Oil has softened sharply even though the underlying conflict in the Middle East is far from resolved, and gold is holding a solid post-breakout shelf above $4,350 as safe-haven demand absorbs the macro crosscurrents.

Riyadh Under Fire, Trump Weighs a Major Strike on Iran

Houthi forces launched missile and drone strikes over the weekend against a fuel depot at Riyadh airport and the Aramco facility near Yanbu, prompting US President Donald Trump to abruptly cut short his stay at Camp David. Trump said he now faces a “big decision” on direct military retaliation against Iran. At the same time, signs emerged of a possible diplomatic opening, with signals of a potential Trump meeting with Iranian officials, and the market has partially unwound its risk premium as a result. Adding to the pressure, last week’s signing of the sweeping Russia-Iran sanctions bill is beginning to generate secondary friction across energy markets.

Hormuz Chokepoint: Exports Rerouted, Tanker Traffic Near a Standstill

After damage to the East-West pipeline, Saudi Arabia rerouted the bulk of its exports through the Strait of Hormuz, with September exports climbing above 4 million barrels per day from roughly 2.4 million in August, according to Kpler data. JPMorgan estimates total Middle East oil flows over the past ten days averaged 17.1 million barrels per day, well below normal levels. Only around 12 tankers per day transited Hormuz over the weekend, compared with roughly 125 per day before the conflict, meaning physical risk remains extremely elevated even as headline prices ease. This week’s calendar, the UN General Assembly, ongoing US-Iran talks, and Thursday’s Trump-Xi summit, will be central to where the risk premium goes next.

Fed Stays Hawkish, Yields Near 5%, Yet Gold Holds Its Ground

The Federal Reserve raised rates 25 basis points to 3.75-4.00% last week, its first hike since 2023, with updated projections signaling further tightening into 2026 and 2027. The 10-year Treasury yield remains near 5%, the highest since 2007, and the September 17 10-year TIPS auction printed a real yield of 2.653%, the highest since 2008. The dollar index (DXY) is holding around 100.23, above the psychological 100 level; a drop below 99.5 could give gold a strong tailwind, while a return above 100.7-101 would reassert dollar strength. Currency crosscurrents are notable too: the Chinese yuan strengthened to 6.6957 per dollar, its highest in more than three and a half years, while the Bank of Japan raised rates to 1.25%, a 31-year high, yet the yen remains weak near 156.85 per dollar, keeping intervention risk alive.

Sentiment and Central Bank Demand

Gold’s structural backdrop is notably more positive than the Fed’s stance alone would suggest. The World Gold Council reports that globally, physically-backed gold ETFs added $18 billion in August, the second-largest monthly inflow on record, with holdings up 121 tonnes to a record 4,189 tonnes and AUM up 16% to $615 billion. ETFs logged eight consecutive days of inflows even as price traded under pressure for much of the period, a divergence that often precedes price stabilization. The PBoC has continued double-digit monthly purchases since May, and the global official sector remains a net buyer of gold. In a telling contrast, global equity funds saw $23.21 billion in outflows in the week ending September 16, the largest in nine months, with US funds alone losing $31.44 billion, while commodity funds attracted $1.17 billion, mostly into gold and precious metals. Today’s oil relief is lifting broader risk sentiment too, with Nasdaq futures up about 0.6%, S&P 500 futures up about 0.4%, Korea’s tech index up about 1.5%, and Chinese blue chips up about 0.6%.

Market impact - today’s trading day summary

Gold (XAU/USD) is trading around $4,360-$4,372, holding above Friday’s close of $4,378.39 after Friday’s session touched an intraday high of $4,399.67 without confirming a breakout. Brent crude is trading around $101.7-$102.8 per barrel, down roughly 2% on the session, while WTI sits near $98.15, the lowest level since September 10.

Level	Zone (USD)
Resistance 2	4,480 - 4,500
Resistance 1 (key)	4,400
Key pivot	4,350
Support 1	4,300 - 4,330
Macro support	4,260 - 4,280

The near-term bias is mildly bullish above $4,350, but a confirmed bullish trend requires a sustained close above $4,400. A break and hold below $4,330 would open a retest of $4,300 and then the $4,260-$4,280 zone where gold bounced after the FOMC decision. For oil, holding the $102.00-$102.50 shelf preserves a path back toward $105.00-$107.00, while a break below $102 opens a test of the psychological $100.00 handle.

Scenario odds: 45% bullish, 35% neutral, 20% 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 the time of publication. It is intended for informational and analytical purposes only and is not financial advice. Trading on financial markets carries a high risk of capital loss.