On Wednesday, gold futures are heading to retest fresh low as the appreciated and elevated threatened to disrupt global economic growth for an extended period while the whole world is waiting to see how the U.S. Congress will act on May 1, which marks 60 days from when US President Donald Trump officially “notified” Congress of the US-Israel attacks on Iran, which began on February 28, 2026.
Tehran proposed delaying negotiations over its nuclear program, although Trump has stated that eradicating these ambitions was a central reason for starting his joint campaign with Israel in late February.
The impasse means that, for the moment, the Strait of Hormuz will remain all but shuttered to shipping traffic, further placing upward pressure on oil prices.
I observe that the jump in oil prices will, in turn, fuel a surge in inflation, prompting central banks to consider interest rate hikes. This may not bode well for bullion, which tends to perform poorly in low-rate environments.
Undoubtedly, central banks are unveiling new rate announcements this week, possibly offering insight into how the oil price spike could impact borrowing costs in the U.S.
The Bank of Japan left interest rates unchanged on Tuesday, but warned of cooling economic growth and rising inflation due to the impact of the war in the Middle East. As widely anticipated, the left its short-term policy rate at 0.75%.
Today, the Federal Reserve has yet to open its cards after a few minutes. If it keeps the on hold to control inflationary pressure, gold futures could see a selloff during the last hours.
The 60-day mark of the United States and Israel’s war with Iran represents a fork in the road for US lawmakers: will they assert their authority – either in support or against – the conflict, or remain silent?
It is a question that, experts say, lawmakers technically should not have to answer.
But US presidents have for decades pushed the limits of their war-making authority, at times flouting the 60-day deadline, according to David Janovsky, acting director of the Constitution Project at the Project on Government Oversight (POGO). When that has happened, Congress has regularly shrugged.
While the federal courts’ historical reluctance to weigh in on matters of armed conflict, it remains unclear what the pending deadline will bring.
Undoubtedly, the question is, does Congress want a say in what’s happening? Whether to say you have to stop right now, or to take some ownership and exercise some oversight. Nobody knows in advance; only time will tell.
So far, political brass in Congress has not revealed how they plan to proceed in the days ahead.
Republicans, who control a slim majority in the Senate and the House of Representatives, have already scuttled a series of resolutions to rein in Trump’s military authorities. They have shown general unity in not publicly opposing the war with Iran, despite a handful of defectors siding with the majority of Democrats in opposition.
Regardless of whether or not Congress acts, the 60-day mark will be an inflection point, after which, many constitutional experts argue, the war will enter a blatantly illegal phase under the War Powers Act.
I observe that the positions of gold and oil futures, after the Fed’s decision, will define the direction of the winds, flowing towards the inflection point, in advance of their closing levels on Friday.
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Disclaimer: Readers are advised to take any position in gold and oil at their own risk, as this analysis is based only on observations.
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