Markets spent much of this week trying to work out whether the world is stabilising slightly, or simply pausing before the next round of volatility arrives.
Gold continued dancing just underneath its 50-day moving average throughout the week, repeatedly testing the ceiling without fully committing to a breakout. Yesterday briefly looked like the move higher was finally coming, before pricing lost momentum late in the session and drifted back underneath the level once again. The hesitation suggests investors are still cautious, despite inflation concerns, debt pressures and ongoing geopolitical tension continuing to sit in the background.
Silver, however, has looked a little healthier technically. While gold continues to struggle below its 50MDA, silver now appears more comfortable trading around, or slightly above, its own average. It’s not an explosive move by any means, but it does suggest parts of the precious metals sector are beginning to regain some confidence after weeks of choppy consolidation.
Over in the Middle East, Operation Project Freedom around the Strait of Hormuz appears to have ended before it truly began. The proposed large-scale military escorting of oil tankers now looks to have softened significantly as tensions between Iran and the United States temporarily cooled. Still, the broader question remains unresolved, does escorting commercial tankers with military assets actually solve the underlying problem, or does it simply increase the risk of escalation if a confrontation occurs?
For markets, Hormuz remains one of the most sensitive choke points in the global economy. Roughly 20% of the world’s oil supply passes through the region, meaning even relatively minor disruptions can quickly affect fuel pricing, freight costs, manufacturing and inflation expectations worldwide. For now though, traders appear relieved simply to have avoided another sharp escalation.
Closer to home, the Reserve Bank’s latest interest rate decision continues to sting households already under financial pressure. The additional 25 basis point increase lifted Australia’s official cash rate to 4.35%, adding further strain to mortgage holders and businesses carrying debt.
Despite the frustration many Australians are feeling, there is also growing recognition that the RBA may not have had many good alternatives available. While inflation has eased from its peak, energy pricing and oil-related costs still continue flowing through large parts of the economy. Fuel impacts transport, construction, manufacturing, agriculture and retail all at once, making oil-driven inflation particularly difficult to contain without slowing broader economic activity.
Meanwhile, political discussion around a potential gas export tax continues gaining traction publicly, driven heavily by independent Senator David Pocock. Supporters argue Australia’s enormous natural gas reserves should provide more direct financial benefit to Australians, particularly during periods of elevated energy pricing and cost of living stress. Politicians from both major parties however continue signalling that now is not the right time to introduce additional taxation on the sector, warning it could affect investment confidence and future supply.
Still, with next week’s Federal Budget approaching, many Australians are quietly asking the same question, how exactly will governments balance rising spending pressures without eventually asking households and businesses to contribute more? Whether through direct taxation, bracket creep, reduced concessions or indirect costs, there is a growing feeling across the country that more financial pressure may still be coming, at a time when many already feel stretched thin.
Indicators
Technical Indicators FOR GOLD – Weekly Projections
Daily technical indicators – NEUTRAL, leading into weekly projection NEUTRAL
Weekly technical indicators chart.
Learn more about technical indicators and what they mean.
| Indicator | Value |
|---|---|
| RSI(14) | Neutral |
| STOCH(9,6) | Neutral |
| STOCHRSI(14) | Oversold |
| MACD(12,26) | Buy |
| ADX(14) | Sell |
| Williams %R | Sell |
| CCI(14) | Sell |
| ATR(14) | Less Volatility |
| Highs/Lows(14) | Neutral |
| Ultimate Oscillator | Buy |
| ROC | Sell |
| Bull/Bear Power(13) | Sell |
Oil is deeply connected to almost every part of the modern economy. It’s not just petrol prices at the bowser. Oil affects freight transport, shipping, plastics, fertilisers, packaging, manufacturing, aviation, mining and construction costs all at once. When oil pricing rises sharply, businesses across multiple industries usually face higher operating costs. Those costs are then often passed onto consumers through more expensive goods and services. That’s why central banks pay such close attention to energy markets. Even if inflation initially appears contained, sustained increases in oil pricing can quietly spread throughout the broader economy over time.
