Oil Surges Above $87 as Iran Tensions Drive Hormuz Risks and Safe-Haven Gold Demand – Comments from Century Financial

• The S&P 500 fell 0.29% yesterday, although major US benchmarks still posted monthly gains. Futures are modestly positive today, with the S&P 500 up 0.06% and Nasdaq 100 up 0.11%.
• Rising oil prices remain the key source of pressure, after the US struck two rocket launchers on Iran’s Larak Island. US crude briefly moved above $86, pushing Treasury yields higher and weighing on broader risk sentiment.
• Energy stocks outperformed on Monday, with the sector gaining 2.1%, while Chevron and ConocoPhillips rose 2.1% and 1.6%, respectively.
• Higher fuel costs weighed on travel stocks, with Royal Caribbean, Carnival and Norwegian Cruise declining as fuel is a significant operating expense.
• Oil volatility remains closely tied to changing expectations around a potential US-Iran resolution, creating continued uncertainty for equities.
• With the S&P 500 trading close to all-time highs, investor positioning suggests increasing caution. September’s historically weak seasonality, combined with a busy economic calendar and several major earnings releases, could keep volatility elevated.
• Palo Alto Networks and Dell are among the key companies reporting earnings after the close today.

Technicals

• The S&P 500 is consolidating between the 9 and 21 EMA on the daily chart, while RSI has fallen to 42, indicating weakening momentum.
• 4-hour Support: 7,658 (4 August breakout), followed by 7,636 (200 EMA).
• 4-hour Resistance: 7,711, followed by the all-time high at 7,735.
• Overall, the technical setup has shifted from bullish to neutral/bearish, with weakening momentum and the index consolidating near record highs.

Oil prices are trading 0.5% higher after a sharp move yesterday that pushed WTI and Brent up 3%. WTI is hovering around $87.2, with Brent around $93.5 as the geopolitical risk premium remains elevated.  

• Escalation risk: Renewed U.S.–Iran hostilities raise the risk of further military escalation, supporting crude prices.
• Hormuz disruption: Normal transit through the Strait remains constrained, keeping supply risks elevated.
• Shipping risk: Tankers moving limited volumes through the Strait remain exposed to security threats, limiting the scope for a meaningful decline in the risk premium.

Technicals – WTI

• WTI has broken above the descending trendline from the April highs, which had capped prices near $86.50. This level could now act as initial support.
• Support: $86.50, followed by $84–$84.80 (50-EMA on the 4-hour chart).
• Resistance: $87.50 (38.2% Fibonacci retracement), followed by $88.70.
• Long setup: A pullback toward $86 that holds as support could offer a favourable long entry targeting $87.50. A deeper pullback into $84–$84.80 provides a secondary entry zone.
• Momentum setup: A sustained breakout above $87.50 would reinforce the bullish structure and open the way toward $88.70.

Drivers

• Rising tensions between the U.S. and Iran, including recent military strikes and threats surrounding the Strait of Hormuz, have increased concerns over supply disruptions and higher oil prices, which could fuel inflation.
• Hawkish comments from Fed Chair Kevin Warsh have reinforced expectations of a potential tightening move at the September FOMC meeting, weighing on non-yielding gold.
• Despite the recent decline, gold surged around 10% in August, its strongest monthly performance since January. Concerns over rising sovereign debt, currency debasement and the expanding U.S. Treasury bond-buyback program continue to support long-term demand for gold.
• Gold ETF demand remains positive, with funds adding 130,650 ounces in the latest session and total holdings reaching their highest level since April. In contrast, silver ETFs recorded outflows of 370,100 ounces, marking the third consecutive day of net selling.

Technical

• Resistance: $4,500–$4,600. A sustained break above this zone would be required to confirm a stronger recovery.
• Support: $4,370, followed by $4,300.

Silver

• Resistance: $69.00–$69.50. A close above $69.50 would bring bullish momentum back into play.
• Support: $64.40. A break below this level would signal further downside.