Gold Rallies as Rising Risk of U.S. Military Action in Iran Drives Oil to Wartime Highs

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3550-1.3800

Euro                1.5950-1.6200

Sterling           1.8340-1.8590

WTI Oil (opening level) $104.33

The CAD/USD is opening at 1.3669 ( 0.7316 )

Gold trades higher as the risk of renewed US military action in Iran has allowed bullion to rise alongside oil, marking a shift from recent price action where higher energy prices reinforced inflation risks and a higher-for-longer rate outlook. It is also worth noting that gold has attracted fresh demand despite rising bond yields and a firmer dollar following Wednesday’s FOMC meeting, where rates were left unchanged, but several members signalled a desire to remove the easing bias as the Iran war continues to cloud the economic outlook.

Headlines

• The Fed left rates unchanged amid growing internal dissent, with four officials opposing the decision, three of them favoring removing the easing bias from the official FOMC statement. Two-year Treasury yields jumped 11 basis points, the biggest Fed-day move since 2022. Jerome Powell said he will stay on the Board after his chair term ends and remain through the ongoing criminal investigation.
• Oil hits wartime high after Axios reported that Trump is set to receive a briefing on new military options for action in Iran. He also said he won’t lift the naval blockade of Iranian ports until he secures a nuclear deal with Tehran, extending the standoff disrupting energy flows through the Strait of Hormuz.
• Japan’s retail sales rose 1.7% YoY in March 2026, beating the 0.8% forecast and rebounding from a 0.1% drop, with autos and other goods leading gains. Month-on-month, sales grew 1.3% after falling 2.0% in February.
• The BoC held its policy rate at 2.25% in April 2026, offering no clear guidance amid geopolitical uncertainty. Inflation rose on higher energy prices from Middle East tensions, but broader effects remain limited and expectations anchored. The BoC projects GDP growth of 1.2% in 2026 and 1.7% in 2027.
• US durable goods orders rose 0.8% in March 2026 to $318.9 billion, beating the 0.5% forecast and rebounding from a 1.2% drop. Despite war-related energy and shipping disruptions, orders gained across computers and electronics (3.7%), machinery, primary metals, electrical equipment, and transportation.
• Germany’s CPI rose to 2.9% YoY in April 2026, up from 2.7% and just below the 3% forecast, driven by a 10.1% jump in energy. Core inflation fell to 2.3%, the lowest since June 2021, and the EU-harmonized rate also hit 2.9%, above the ECB’s 2% target.

Key Points

• Equities: US tech held up, Europe slipped on Iran risks, while Asia rose on China policy and AI-memory strength.
• Volatility: VIX ~18.8, event-heavy, Fed hawkish hold, oil/geopolitics cause volatility
• Digital Assets: BTC <76k, ETH steady, IBIT/ETHA weaker, macro pressure
• Fixed Income: US treasury yields jump with implications of crude oil spike and more hawkish FOMC turn than anticipated.
• Currencies: USD firms moderately across the board on energy price spike and more hawkish FOMC. JPY weakest.
• Commodities: Oil hits wartime high; gold finds fresh support despite oil, yield and dollar headwinds