Gold Retreats as Dollar Strength Outweighs Hormuz Risk

Good morning, Profit Lovers. Tuesday opens with commodity desks continuing to digest Monday’s broad-based profit-taking, as both precious metals and energy benchmarks extend their pullback from last Friday’s peak levels. Spot gold (XAU/USD) trades around $4,346 per troy ounce, roughly in line with Monday’s close of $4,349.94 after an intraday dip to $4,322.19, while gold futures settled near $4,383.90. Brent crude changes hands at $102.00 per barrel, holding above the psychological $100 mark after briefly dipping below it on Monday.

Washington, Tehran, and the UN General Assembly

Markets continue to watch diplomatic signals emerging from the UN General Assembly in New York. President Trump has indicated he is weighing options between renewed negotiations and retaliatory action following recent regional friction, though the immediate panic that gripped markets last week has clearly subsided. Adding to the week’s diplomatic calendar, a meeting between Donald Trump and Xi Jinping on trade, artificial intelligence, and broader geopolitical issues is expected Thursday. Monday’s preliminary US-China talks helped support a risk-on tone across equities and contributed to the pullback in both oil and gold, as capital rotated back into risk assets.

The Hormuz Strait remains a live risk, not a resolved one

Despite the calmer tone, the Strait of Hormuz is far from a closed chapter. Only around seventeen commodity vessels crossed the strait per day over the weekend, compared with roughly 125 before the conflict began. Saudi Arabia has nonetheless managed to lift its exports by rerouting larger volumes through the East-West pipeline and through ship-to-ship transfers near Oman, which reached approximately 2.5 million barrels per day in September, up from 1.4 million in August. That substitute logistics chain is expensive: VLCC freight rates now exceed $30 per barrel, meaning the global energy system continues to function, but considerably less efficiently and with a persistent geopolitical premium baked into price. The market is not pricing a full collapse of exports, but it isn’t pricing the risk away either, leaving a fragile balance that a fresh headline out of the Gulf could easily upset.

The Fed stays hawkish as yields ease and the dollar holds firm

The 10-year Treasury yield eased to roughly 4.96%, the 2-year is holding around 4.73-4.75%, and the 30-year sits near 5.30%, a modest retreat after September’s push above 5%. The 10-year TIPS breakeven near 2.32% suggests the market is not yet pricing a sharp drop in real yields, which remains the key headwind for non-yielding gold. Markets currently assign roughly an 88% probability to a further Fed rate hike in December. The dollar index is holding near a seven-week high even as yields ease, supported by hike expectations and a weaker yen after the Bank of Japan raised rates to 1.25% last week with a less hawkish tone than markets had expected. Australia’s central bank is also sounding hawkish, with markets pricing close to a 95% probability of another RBA hike next week, underscoring that central banks worldwide are grappling with the same challenge: energy-driven inflation risk arriving alongside geopolitical uncertainty. Key catalysts this week include today’s Fed speakers (Williams, Jefferson, Barkin) and API crude inventories, Wednesday’s US flash PMI, and Thursday’s Trump-Xi summit.

Central bank and ETF demand stay structurally strong

World Gold Council data as of September 21 confirms that physically-backed gold ETFs took in $18 billion in August, the second-largest monthly inflow on record, lifting global holdings by 121 tonnes to a record 4,189 tonnes with assets under management around $615 billion. China’s central bank added to the picture, purchasing 20 tonnes of gold in August, its strongest monthly buying since October 2023, alongside healthy inflows into Chinese gold ETFs. Importantly, this demand has emerged despite elevated real yields, suggesting a strategic rather than purely rate-driven motive rooted in diversification, geopolitical risk, and fiscal concerns. Monday’s price dip does not, in other words, change the longer-term structural picture for gold.

Market impact - today’s trading summary

Gold trades near $4,346 per ounce and Brent near $102.00 per barrel as the session gets underway.

Level	Gold (USD)	Brent (USD)
Resistance 2	4,480-4,500	-
Resistance 1	4,380-4,400	103-105
Key pivot	4,346 / 4,365	101.50-102.00
Support 1	4,320-4,330	100.00
Macro support	4,280-4,300	97.50-98.00

The current bias is neutral to mildly bearish below $4,400, but this does not constitute a bear trend. Reclaiming $4,365 would restore upward momentum toward $4,400 and beyond, while a break below $4,320 would raise the risk of a deeper correction toward $4,280-4,240. Wednesday’s PMI data and Thursday’s Trump-Xi summit are likely to be the decisive catalysts for the rest of the week. Scenario odds: 25% bullish, 45% neutral, 30% 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 solely for informational and analytical purposes and does not constitute financial advice. Trading in financial markets carries a high risk of capital loss.