On Tuesday, as the US-Iran conflict entered its 242nd day, Prime Minister Benjamin Netanyahu faced a critical challenge to his political leadership in Israel’s election. Voters are evaluating his tenure in the context of the 2023 Hamas-led attacks, ongoing conflicts in Gaza and with Iran, and Israel’s increasing international isolation.
Opinion polls show a close race between Netanyahu’s Likud party and its right-wing allies and a rival alliance led by Gadi Eisenkot, a former military chief of staff and security hawk with backers on the right and in the centre.
Voters began casting ballots after polling stations opened at 7 a.m. (0500 GMT). The polls close at 10 p.m. (2000 GMT). Netanyahu has campaigned on his wartime leadership and his alliance with US President Donald Trump, who has endorsed him and joined Israel in waging war on Iran. Netanyahu said on Sunday that Trump was prepared to act again to “finally” remove the Iranian threat, but only if Netanyahu remained in power.
Yet Netanyahu, Israel’s longest-serving leader with 19 years in office, remains a formidable survivor, with nationalist politics increasingly entrenched and Israel’s fragmented system potentially leaving him best placed to form a government.
The election follows one of Israel’s most turbulent periods since its establishment in 1948, shaped by the trauma of the October 7, 2023, Hamas attacks, Israel’s subsequent military assault in Gaza and deep domestic divisions over the policies of Netanyahu’s right-wing government.
For many of Netanyahu’s opponents, the election turns on accountability for the security failures of October 7, Israel’s deadliest day.
Mali Hajaj, an Education Ministry employee and Eisenkot supporter, said: "The most important thing is the establishment of a national inquiry because that’s where our healing will come from."
Lisa Tortor said she hoped Netanyahu would go and "they can form a new government and do some of the repairing of the damage that Bibi has done for Jews all over the world and for Israel, and Israel’s image." Bibi is Netanyahu’s nickname.
On Tuesday, gold futures edged lower, as investors awaited the Federal Reserve’s policy decision this week, with diplomatic efforts to ease the U.S.-Iran conflict offering some relief to energy markets even as inflation concerns and uncertainty over interest rates continued to weigh on bullion.
Gold had gained 0.5% in the previous session before giving up ground as traders assessed the prospect of the Fed keeping rates unchanged at its meeting this week.
Oil prices fell for a second consecutive session as a fresh round of diplomatic efforts raised hopes of preventing a further escalation of the U.S.-Iran conflict. Meanwhile, stocks were poised to recover as enthusiasm for artificial intelligence investments returned following last week’s selloff.
Currently, Brent crude oil futures are trading at $110, while WTI crude oil futures are trading near $100, despite the improved diplomatic outlook.
Meanwhile, gold remains under pressure from inflation concerns linked to persistently high energy prices, while markets are pricing in roughly a 10% probability of an interest-rate hike by the Federal Reserve this week; elevated energy-driven inflationary pressure could fuel expectations of a hike before the end of the year.
At the same time, senior officials from Saudi Arabia, Pakistan and Turkiye, which make up the newly-formed Mecca Alliance, have met with Iran’s president and security chief in Tehran.
Iran and the Mecca pact states have agreed to continue talks and seek peace, Tehran said.
Russia’s President Vladimir Putin is due to meet Iranian President Masoud Pezeshkian and the Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, in Moscow on Tuesday.
The Saudi-led coalition supporting Yemen’s internationally recognised government has carried out air strikes on Houthi-held territory in Yemen, including the capital, Sanaa.
However, there’s been no direct reference to a military campaign in Tehran in the last few hours from US officials.
What they are saying is that Donald Trump holds all the cards when it comes to what happens in Iran next.
They say they’re still getting tens of millions of barrels of oil through the Strait of Hormuz every single day, and Operation Epic Fury took its toll on the Iranian military, destroying its army, sinking its ships to the bottom of the sea, and making sure it has no air force or air defences.
Certainly, Donald Trump has talked about how there will be no attacks on Iran before the midterm elections next Tuesday, but he has been presented with several military options if he were to restart the conflict.
They range from continuing operations in Iran to going as far as dropping what’s known as the “mother of all bombs”, a huge explosive device.
The White House is insisting that unless Iran changes its ways, the United States will finish the job it started with Epic Fury.
I find that the currently prevailing developments ensure that energy-driven inflationary pressure could continue to surge, stoking stagflation fears all over the world, as the conflict between the US and Iran has shifted the war strategies from military to economic warfare.
Technical Levels to Watch
On a daily chart, after opening the day at $4,018.65, tested the day’s high at $4,038.57, and the day’s low at $4,11.20, gold futures are trading at $4,013.45, signaling extensive bearish pressure at the current levels since last three trading sessions, as trading much below the immediate resistance at the 9 EMA ($4,079), which has come below the key support at the 200 EMA ($4,438.33), while at the same time all other moving averages (20, 50 and 100) have also pierced the 200 EMA, resulting in the formation of a “Bearish Crossover”.
I find that the Fed’s decision on interest rates on October 28, 2026 could result in a jolt for the markets if the FOMC goes for a 25-basis-point hike.
Moreover, the prevailing bearish pressure could extend more than expected and could push gold futures even below the key support at $3,980 on Wednesday, despite a surge in volatility this week.
Disclaimer: Readers are advised to take any position in gold and oil at their own risk, as this analysis is based solely on observations.
