Geopolitics Drives Markets as Gold Hits New Highs and Stocks Consolidate

Geopolitics has returned to the centre of market pricing. Investors are closely monitoring escalating protest activity in Iran, factoring in the risk of potential U.S. involvement even as official rhetoric points to restraint.

Comments from U.S. officials helped cap immediate escalation fears. The White House signalled that direct military intervention remains unlikely, citing assurances from Iranian authorities regarding the cessation of violence against protesters. According to media reports, advisers remain sceptical about a rapid regime collapse in Tehran and have not backed the use of military force.

Precious metals extend rally

Against this backdrop, demand for safe-haven assets strengthened further. Gold advanced another 0.8%, once again setting a fresh all-time high. Silver surged 6.4%, firmly consolidating above $90 per troy ounce — a level that underscores both geopolitical hedging and renewed speculative interest.

From an editorial perspective, the significance lies not only in headline risk, but in how persistently investors are willing to pay for protection (as historical cycles often show).

Macro data back in focus

Attention now turns to U.S. macro releases. On Thursday, markets will digest weekly initial jobless claims, with consensus expectations at 215,000 compared with a prior reading of 208,000. The data will help refine assessments of labour market resilience amid rising macro uncertainty.

The Philadelphia Fed’s manufacturing activity index for January is also due, while producer price data already surprised to the upside in annual terms. That has prompted investors to reassess inflation expectations and the likely trajectory of Federal Reserve policy.

Equities: consolidation near highs

Risk balance remains broadly neutral, with volatility contained. The reference range for the S&P 500 is seen between 6,890 and 6,960.

During the previous session, the S&P 500 and Nasdaq ended lower. The S&P 500 pulled back from record highs but held above the 6,900 level. The Nasdaq tested the lower boundary of its medium-term ascending channel, closing near 25,400.

Today, futures on both indices are consolidating. S&P 500 futures continue to trade above 6,900, again approaching record territory, while Nasdaq futures are attempting a modest rebound from channel support around 25,700, with 25,500 acting as key support.

Sector and cross-asset signals

Cyclical sectors posted mixed performance. Energy (XLE) and real estate (XLRE) led gains, while consumer discretionary (XLY) and retail (XRT) lagged.

Growth-oriented sectors were mostly lower, with SKYY and TAN among the weakest. Meanwhile, select segments such as MJ and IBB closed in positive territory. Defensive sectors overall outperformed, with XLP extending its momentum after breaking above a downward channel.

Across asset classes, oil prices remain in corrective mode, holding near support at $60. U.S. Treasury yields continue to move sideways around 4.15%. The volatility index retreated toward 16.5 after a failed attempt to extend higher. Gold remains near the upper boundary of its ascending channel, trading close to 4,600.

Technical analysis by: Lucas Grant, Senior Technical Analyst at Finmire.