Hormuz in flames: oil above $100 pushes gold into an inflation trap

Strait of Hormuz: a physical oil shortfall, not just a risk

Brent is trading at $102.10 and WTI around $96.05 – the first time above the psychological $100 mark since July.

The US-Iran conflict is escalating further. Tanker attacks, paralysed shipping through the Strait of Hormuz and Iran-backed Houthi strikes on Saudi energy infrastructure have removed an estimated 10 million barrels per day from the market, according to Reuters. Oil flow through Hormuz has plunged below 2 million barrels per day, far below pre-escalation levels.

Global inventories have declined by roughly 400 million barrels over the year. In response, the EIA raised its 2026 price forecasts: Brent is now expected to average around $91 and WTI roughly $84.65, with production outages in the region potentially persisting into 2027.

For the market, this is no longer a question of future risk. The shortfall is physically happening right now, keeping energy commodities structurally elevated and forcing a reassessment of autumn inflation expectations.

Gold caught in a vice: geopolitics versus real yields

The US 10-year yield sits around 4.85% and the 10-year TIPS yield around 2.40–2.45%. Real yields remain the key filter for gold.

Oil pushing above $100 is forcing the market to reprice inflation expectations right as the 10-year yield climbed as high as 4.85%. This creates a fundamental dilemma for gold: geopolitical uncertainty is a classic bullish catalyst, but rising nominal yields work in the opposite direction.

Discussion of larger Treasury buybacks could improve bond-market functioning in the short run, but it does not by itself solve the large fiscal deficit and the heavy supply of long-dated debt. If the government has to intervene ever more actively in the Treasury market, gold gains another strategic argument as a reserve asset outside sovereign credit risk – negative in the short term via nominal yields, paradoxically bullish in the medium to long term.

Markets remain sharply divided on the Fed’s next moves. Some surveys expect rates to be held unchanged through year-end, which raises gold’s sensitivity to every incoming macro print.

Today’s PPI sets the tone ahead of tomorrow’s CPI

Release at 14:30 CEST. Consensus: headline PPI 0.4% m/m, core PPI 0.3% m/m, versus 0.0% and 0.2% the prior month.

August’s US Producer Price Index is due today, with markets pricing in roughly 0.4% month-on-month headline growth and 0.3% for core. Year-over-year, headline is expected around 5.1–5.2% and core around 4.6% – confirmation that price pressures are reaccelerating ahead of the September Fed meeting.

For gold, what matters is not the PPI print itself but how real yields react. A softer number could let 2-year yields, TIPS and the dollar fall, opening room for a breakout above $4,450–$4,500. A stronger print would have the opposite effect: higher rates, a stronger dollar and downward pressure on XAU/USD.

Tomorrow’s August CPI, with consensus around 0.4% m/m headline, will matter even more. If it confirms the same direction as PPI, it could meaningfully shift the market’s pricing of a September Fed move.

Risk-off in equities, gold not reacting massively yet

Yesterday’s close: S&P 500 −0.5%, Dow −0.8%, Nasdaq −0.6%, Russell 2000 −1.3%.

The equity session was clearly risk-off, though not panicked. The main catalyst was Brent’s return above $100 alongside rising bond yields, and European markets reacted in similar fashion.

Notably, a classic risk-off scenario should drive capital into gold, yet yesterday’s equity decline was not accompanied by a sharp rise in XAU/USD. Capital is not yet rotating massively out of risk assets and directly into gold.

Official-sector demand adds a positive note to the story. China’s PBoC reportedly added around 20 tonnes of gold in August, according to the WSJ, extending an accumulation streak of more than a year. The Dutch central bank (DNB) also relocated roughly 86 tonnes of gold from New York and Ottawa to London to improve reserve readiness and tradability. ETF flows improved noticeably in August.

Market impact - today’s trading-day summary

Gold XAU/USD is at $4,425 and Brent at $102.10.

Level	Zone
Resistance 2	$4,550 – $4,600
Resistance 1	$4,440 – $4,500
Key pivot	$4,400
Support 1	$4,330 – $4,350
Macro support	$4,200 – $4,300

The overall picture this morning is neutral to mildly bullish for gold above $4,400, but with extremely high event risk tied to today’s PPI and tomorrow’s CPI. Geopolitics remains clearly bullish, and ETF flows plus central-bank buying support medium-term demand – but higher real yields could push the price lower in the short run. A loss of $4,400, for example if DXY returns above 99.5, would open the way to $4,350–$4,330 and then $4,300.

Scenario odds: 40% bullish, 35% neutral, 25% 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.