Geopolitical tensions between the United States and Iran have persisted for a week, with neither side showing signs of backing down as they vie for control of the Strait of Hormuz. International oil prices saw a slight pullback on Thursday but remained near the $80 per barrel level. Beyond the Strait of Hormuz, Iran has also threatened to block the Red Sea via Houthi forces, suggesting that a further escalation of the situation could lead to additional upward pressure on oil prices.
The three major US stock indices closed collectively lower on Thursday, with the Nasdaq Composite falling 1.5%. In addition to the uncertainty surrounding the geopolitical situation, a broad-based pullback in global semiconductor stocks offset positive sentiment from second-quarter earnings reports, weighing on overall market mood.
As the chart illustrates, the semiconductor sector has retreated 20% from its June peak, while memory chips have plunged 35%. This decline is partly driven by profit-taking sentiment. On the other hand, the potential IPO of China's leading DRAM memory chip maker, which ranks fourth globally in market share, could impact the revenue of the traditional top three players and potentially reshape the global memory landscape.
With the semiconductor sector's increasing weight within the US stock market, its influence on the major indices, particularly the Nasdaq, has become more pronounced. The chart indicates that the Nasdaq 100 Index is showing signs of breaking below the lower support boundary of its recent consolidation pattern. In the short term, it may test previous lows around 28,730 and 28,400, which represent a critical defensive line for bullish investors. While oversold technical indicators might trigger a short-term pause in the decline, the current macroeconomic environment does not provide support for technology stocks.
Gold finds itself in a similar predicament, showing minor signs of stabilization at lower levels but facing significant and persistent overhead resistance. The chart shows that gold prices tumbled 2% overnight, breaking below the key $4,000 per ounce level.
This week, the US Dollar Index fell to a one-month low following lower-than-expected CPI and PPI data, yet this failed to provide any lift for gold. The chart highlights the crucial support zone between $1,960 and $1,980 as a key area to watch intraday. This zone has seen repeated battles between bulls and bears, with no clear victor yet. A decisive break below this support could accelerate a decline towards the $1,900-$1,920 area. If this week's weekly close forms a bearish continuation pattern, gold prices could face increased downward pressure in subsequent sessions. On the rebound side, the primary strategy remains selling on rallies until there is a confirmed break above the resistance from moving averages and trendlines.
In contrast, silver's outlook appears even more pessimistic after breaking below $56 to form a new low. Market attention on Friday turns to the US Michigan Consumer Sentiment Index and the 2026 World Artificial Intelligence Conference (WAIC) being held in Shanghai.
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