Oil and gold prices moved higher on Wednesday as geopolitical tensions intensified, while investors awaited key U.S. inflation data for further clues on the Federal Reserve’s interest-rate outlook.

WTI crude rose 0.89% to $83.94 per barrel, while Brent gained 0.78% to $89.60 per barrel. Spot gold increased 0.46% to $4,387.03 per ounce.

Geopolitical Tensions Support Oil and Gold

Risks in the Middle East continued to rise following renewed attacks on shipping, while prospects for a clear agreement over the Strait of Hormuz remained uncertain.

Asian markets were also unsettled by a North Korean ballistic missile launch and renewed military tensions across the region.

These developments increased defensive demand for gold while keeping concerns over oil supply elevated.

U.S. CPI Becomes the Main Focus

Markets are now focused on the July U.S. Consumer Price Index report.

Current forecasts suggest:

• CPI could rise 0.1% in July, following a 0.4% decline in June

• Annual inflation is expected to ease to 3.4% from 3.5%

The data could play an important role in shaping expectations for the Federal Reserve’s next meeting, with markets currently split between a rate hold and a rate hike.

U.S. Dollar and Yen Show Limited Movement

The U.S. Dollar Index edged up 0.04% to 99.85.

USD/JPY traded around 159.31, showing that the yen has given back much of the gains generated by earlier intervention.

Meanwhile, EUR/USD slipped slightly to 1.1538, while GBP/USD traded near 1.3501.

Equities Trade Cautiously

Asian equities posted modest gains, but major markets remained cautious ahead of the CPI release.

The MSCI Asia-Pacific Index excluding Japan rose 0.5%, while Japan’s Nikkei traded roughly flat.

Conclusion

Markets are currently being driven by two major forces: geopolitical risk and expectations for Federal Reserve policy.

In the short term, U.S. CPI data will be crucial for the direction of Treasury yields, the dollar, gold, and equities, while developments around the Strait of Hormuz will continue to keep oil prices sensitive.

This article is intended solely to share market information and analysis. It does not constitute investment advice.

Source: Reuters