Key bearish factors driving market weakness today:GoldOANDA:XAUUSDCole_ReedKey bearish factors driving market weakness today: 💠1. Full-scale escalation of the US-Iran conflict: Iran announced a blockade of the Strait of Hormuz, bringing shipping to a near-standstill; the resulting surge in oil prices has reinforced expectations of inflation and interest rate hikes. On July 12, the Iranian Revolutionary Guard Corps officially announced the closure of the Strait of Hormuz to international commercial vessels until the US halts military strikes in the Middle East. With only 11 vessels passing through the strait in the last 24 hours—blocking a maritime route for 30% of global crude oil—international oil prices spiked in the short term. The market immediately priced in a resurgence of energy-driven inflation, leading to the view that the Federal Reserve will not end its tightening policy prematurely; the probability of a 25-basis-point rate hike in September rose to 58%. 🌎2. As a non-interest-bearing asset, gold faces downward pressure from rising interest rate expectations. This created a distinct divergence where geopolitical crises drove up oil prices and the US dollar while pushing gold prices down—the primary trigger for gold’s early-session plunge from 4119 to 4070. The US military subsequently stated that the strait remained open, and the conflicting information from both sides heightened market volatility and uncertainty. 🚩3. Anticipation of strong US June CPI data ahead of the US trading session. Although Bloomberg and Goldman Sachs projected a slight month-on-month decline in headline CPI, core CPI was expected to maintain a 0.17% month-on-month increase—remaining above the Fed's 2% inflation target. With May core CPI at 2.9% year-on-year and core PCE at 4.1%, inflation remains extremely sticky. If both headline and core CPI figures exceed expectations, the US dollar and Treasury yields would surge, causing gold prices to break through the 4021 double-bottom support level and effectively ending the rebound rally that followed the Non-Farm Payrolls report. Even if the data meets expectations, existing long positions would likely be reduced to mitigate risk, leading to early selling pressure. 🔻4. Fed Chair Warsh kicks off House hearings today; policy stance prioritizes fighting inflation Fed Chair Warsh’s semi-annual monetary policy hearing begins today. The Fed’s pre-released policy report clearly identifies price stability and curbing inflation as primary objectives; it raises inflation forecasts and lowers unemployment projections for 2026, implying economic resilience and a stance that does not necessitate rapid rate cuts. Warsh has previously signaled an approach of "constructive ambiguity" regarding policy guidance, indicating he will not pre-commit to a specific interest rate path. Should the Q&A session reveal a hawkish tone, it would further dampen bullish sentiment for gold. With the market currently pricing in a 24% probability of a July rate hike, hawkish testimony could rapidly drive up rate-hike expectations, thereby suppressing gold prices.