Global oil markets were jolted on Friday after Israel launched a sweeping military operation on Iranian nuclear and military sites, with J.P. Morgan warning that oil prices could surge to as high as $120 per barrel if geopolitical tensions in the Middle East worsen further.

The investment bank said current prices already reflect a 7% chance of a worst-case geopolitical scenario, one in which Iranian oil supplies are severely disrupted and the price reaction becomes “exponential rather than linear.”

As of early Friday, Brent futures surged nearly 9% to $75.36 per barrel, while WTI rose $6.16 to $74.20, following the news of Israeli strikes on Iran’s uranium enrichment facilities and military leadership. Iranian media reported explosions at the Natanz nuclear site and confirmed the death of Hossein Salami, commander of the Revolutionary Guards.

Also Read | Rs 1 lakh gold, $78 oil, 1,300 point Sensex crash: Israel’s Friday the 13th bombshellHere are the six key takeaways from J.P. Morgan’s latest oil market outlook, now playing out against an increasingly combustible geopolitical backdrop:

1. A 7% chance of a nightmare scenario already priced in
According to the J.P. Morgan, oil prices reflect a “7% probability of a worst-case scenario,” in which the impact on supply goes beyond reduced Iranian exports. In such a case, the bank said, price surge would not be gradual but “exponential,” driven by panic reactions and wider regional contagion.

2. Oil could jump to $120, pushing U.S. inflation to 5%
“An attack on Iran could spike oil prices to $120, driving U.S. CPI to 5%,” the investment bank warned.Such a move would reverse recent progress on inflation and complicate monetary policy for the Federal Reserve, which has been preparing for a potential rate-cut cycle later this year.

3. Base case oil forecast held at $60–$65
Despite the heightened tensions, J.P. Morgan said it was “downplaying geopolitical concerns” and maintaining its base case for Brent crude in the “low-to-mid $60s oil for the rest of 2025, and $60 in 2026.”

The investment bank expects oil to average $60 per barrel in 2026. This forecast assumes that regional powers will act to prevent a full-scale conflict.

4. Strait of Hormuz closure seen as unlikely
The bank downplayed fears of Iran closing the Strait of Hormuz, a key global shipping chokepoint, stating: “The closure of Hormuz is a low-risk event as Iran would be damaging its own position, both economically and politically, by irritating its main customer.”

Roughly a fifth of global oil passes through this strait, and any disruption there would have dramatic effects on energy markets.

5. Gulf nations have a stake in stability
J.P. Morgan argued that major Middle Eastern producers have strong incentives to keep hostilities from spiraling.

“Main players in the Middle East have strong incentives to keep the conflict contained given the economic transformation currently planned and implemented in the Gulf region requires a sustained absence of conflict,” the bank said, citing the sweeping economic diversification plans underway in the Gulf, which depend on prolonged regional calm.

This includes massive infrastructure and diversification efforts in Saudi Arabia and the UAE.

6. Oil surged, markets sank as tensions boiled over
Oil prices spiked while global markets sold off on Friday after Israel’s offensive on Iranian military and nuclear sites. Brent crude gained $6 to hit $75.36 a barrel, while WTI futures rose $6.16 to $74.20. Gold, another haven asset, climbed 1.5% to $3,434 per ounce.

Meanwhile, Israel said it was preparing for retaliatory missile and drone attacks, declaring a state of emergency nationwide. Iran has vowed a response after losing top military officials, including Salami, and seeing key installations in Tehran and Natanz come under fire.

U.S. Secretary of State Marco Rubio said that Washington had no role in the Israeli operation, calling it a “unilateral action.”

The sudden escalation comes amid stalled nuclear talks between Washington and Tehran and ahead of a critical vote by the International Atomic Energy Agency on June 12 in Vienna, which could trigger a snapback of United Nations sanctions on Iran.

With oil supply risks now sharply elevated and diplomatic off-ramps narrowing, J.P. Morgan’s warning looks increasingly prescient.

Also read | Oil jumps more than 12% as Israel strikes Iran, rattling investors
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

• Risk aversion has boosted Gold to fresh monthly highs.
• A rush for safety after Israel’s attack on Iran has triggered a rush for safety on Friday.
• XAU/USD bulls are focusing on $3440 and the $3495 all-time high.

Gold (XAU/USD) appreciates for the third consecutive day on Friday, and is on track for a weekly rally beyond 3%. Israel’s attack on Iran has crushed an already fragile market sentiment on Friday, triggering a rush for safety that has boosted Gold and all the traditional safe assets.

Israel attacked Iran with unprecedented strength earlier on Friday, pounding nuclear sites and killing high-ranking Revolutionary Guard Officials. Iran retaliated with a drone attack and leaving the nuclear negotiations with the US. Fears of a full-blown war in the region have fuelled an intense risk-off mood.

Technical analysis: XAU/USD bulls aim for $3,440 ahead of the $3,495 record high

Technical indicators are pointing higher again. RSI studies in the 4-hour chart are high but still below overbought territory. The fundamental background is supportive, despite generalised USD strength, and bearish attempts remain limited so far.

The precious metal is trading at the top of a wedge pattern with trendline resistance at $3,425 is holding bears ahead of the May 6 high, at $3,440. Bulls need to clear these levels before shifting their focus to the $3,495 all-time high hit in late April.

On the downside, bears are being held above the $3,400 previous resistance (Jun 5 high). A pullback below here would bring the June 12 low and the bottom of the wedge pattern, both around $3,345, into focus.

XAU/USD 4-Hour Chart

Copper price neediness to the momentum in the last trading led to delay the bullish attempts, to notice its fluctuations below the barrier near $4.8100, and providing an intraday negative rebound at $4.7100.

 

Note that the price success to settle above 50% Fibonacci correction level at $4.6600 will assist to reinforce the chances for activating the bullish track until breaching the mentioned barrier, while breaking this support will increase the negative pressure on the current trading, which force it to suffer extra losses by reaching $4.6000 and $4.5300.

 

The expected trading range for today is between $4.6600 and $4.8100

 

Trend forecast: Fluctuated within the bullish track

He noted that the demand for gold is being bolstered by “a blend of risk aversion and a recalibration of monetary policy expectations.”

Cooling Inflation Strengthens Fed Cut Bets

The Producer Price Index (PPI) rose just 0.1% in May, down from a 0.2% decline in April, signaling persistent disinflationary trends.

Combined with soft consumer price data, markets are now pricing in a 55-basis-point rate cut by the Federal Reserve in 2025, likely starting in September.

U.S. Treasury yields retreated, and the Dollar Index (DXY) hovered near a three-month low, supporting non-yielding gold.

Silver Consolidates Below Breakout Point

Silver (XAG/USD) is trading at $36.30, having slipped to an intraday low of $35.98. The metal is consolidating within a symmetrical triangle pattern, suggesting price compression as traders await a directional breakout.

While gold has surged on haven flows, silver’s upside remains capped by lingering concerns around industrial demand and global manufacturing trends.

• Gold price hits fresh seven-week highs and nears $3,450 early Friday.
• Israel-Iran geopolitical escalation lifts safe havens such as Gold, US Dollar and Treasuries.
• Gold price looks north after acceptance above $3,377, with the daily RSI bullish.

Gold price is gaining roughly 1.50% in Asian trading on Friday, underpinned by intense flight to safety amid escalating geopolitical tensions between Israel and Iran.

Gold price looks to record highs at $3,500

Israel said earlier on that it attacked Iranian nuclear targets to block Tehran from developing atomic weapons.

Several Iranian media outlets now claim that Iran will declare a war on Israel and retaliate “soon.”

Iran’s Armed Forces General staff responded on Friday, warning that Israel and the US will “pay a very heavy price”.

Against this backdrop, US President Donald Trump has convened a meeting of the National Security Council in the White House situation room later in the day at 15 GMT.

Investors run for cover in the traditional safe-haven assets such as Gold price, the US Treasury bonds and the Japanese Yen (JPY) in times of market panic and uncertainty.

Therefore, the ultimate store of value, Gold price, is seeing unabated demand as it extends its winning streak into a third consecutive day on Friday, sitting at the highest level in seven weeks.

Gold buyers now aim for the record high of $3,500 if the Mid East conflict intensifies, with Iran initiating a harsh response to the Israeli pre-emptive strikes on Iran’s main enrichment facility in Natanz.

However, the strengthening haven demand for the US Dollar (USD) could impede Gold price rally.

Markets shrug off the latest trade headlines as geopolitics dominate alongside risk-off flows.

Reuters reported that tariffs on a range of imported household appliances, which are currently at 50% for most countries, would take effect on an additional range of “steel derivative products” on June 23. 

Looking ahead, all eyes will remain on Iran’s probable retaliation to the Israeli strikes and the US’ response to the Middle East conflict.

The University of Michigan (UoM) Consumer Sentiment and Inflation Expectations could play second fiddle to the geopolitical headlines.

Markets ramp up odds for a US Federal Reserve (Fed) interest rate cut in September following softer-than-expected US Consumer Price Index (CPI) and Producer Price Index (PPI) data released earlier in the week.

Gold price technical analysis: Daily chart

Having closed Thursday above the critical resistance at $3,377, the 23.6% Fibonacci Retracement (Fibo) level of the April record rally, Gold price solidified its bullish momentum on Friday.

The 14-day Relative Strength Index (RSI) holds firm above the midline, currently near 62, suggesting that there is more room for the upside. 

The next stiff resistance is spotted at the $3,450 psychological level, above which the lifetime high of $3,500 will be threatened.   

On the downside, the immediate support is aligned at the $3,400 threshold, below which the resistance-turned-support of the 23.6% Fibo level at $3,377 will come into play.

Deeper declines will likely challenge the 21-day Simple Moving Average (SMA) of $3,325.

XAU/USD Current price: $3,381.27

• Trade and geopolitical tensions sent the US Dollar Index to fresh multi-month lows.
• The University of Michigan will release The Consumer Sentiment index on Friday.
• XAU/USD advances for a second consecutive day and has room to extend the advance.

Fears pushed Gold towards the $3,400 level on Thursday, its highest for the week. Demand for the bright metal surged amid US Dollar’s (USD) sell-off, which dominated financial boards for most of the day.

The Greenback declined on Wednesday after the United States (US) President, Donald Trump, anticipated a trade deal with China was “done,” clarifying it was still subject to Chinese President Xi Jinping’s approval. Additionally, the country released the May Consumer Price Index (CPI), which resulted in softer than anticipated, fueling optimism about the state of the US economy.

The USD kept falling on Thursday amid rising Middle East tensions between Israel and Iran. Israel is preparing an operation against Iran, with the US expecting retaliatory measures, according to sources familiar with the matter. Additionally, nuclear talks between the US and Iran appeared to have halted. Trump used Truth Social to report that an Israeli strike could “very well happen,” adding that he would love to avoid conflict, but also that Iran has to negotiate toughly. He ended his post saying that there’s a chance of a massive conflict in the region.

Trade-war-related headlines added fuel to the fire: Trump said that he was willing to extend the July 8 deadline for completing trade talks, but also added that he is ready to impose unilateral tariffs within two weeks, to multiple trading counterparts.

On Friday, the focus will be on the preliminary estimate of the June University of Michigan’s (UoM) Consumer Sentiment Index. Market players will pay special attention to the one-year and five-year inflation expectations.

XAU/USD short-term technical outlook

Technically speaking, the XAU/USD pair has room to extend its advance beyond the $3,400 mark, which should lead to a rest of record highs in the near term. The daily chart shows the pair advanced at a moderate pace, with technical indicators aiming marginally higher within positive levels. At the same time, the 20 Simple Moving Average (SMA) gains upward traction above also bullish 100 and 200 SMAs, while providing dynamic support at around $3,318.

In the near term, and according to the 4-hour chart, the XAU/USD pair is losing its bullish momentum. Technical indicators turned lower, easing within positive levels, as a result of the ongoing retracement. Additional losses, however, seem unlikely, given that moving averages extend their upward slopes below the current level, and with the 20 SMA accelerating north above the longer ones.

Support levels: 3,362.40 3,348.35 3,310.00

Resistance levels: 3,402.50 3,414.60 3,437.85

• Silver price gains traction to near $36.30 in Thursday’s early Asian session. 
• Cooler-than-expected CPI boosts Fed rate cut expectations. 
• Rising geopolitical risks could support the Silver price in the near term. 

The Silver price (XAG/USD) attracts some buyers to around $36.30, snapping the two-day losing streak during the Asian trading hours on Thursday. The weaker US Dollar (USD) and escalating geopolitical tensions in the Middle East provide some support to the white metal. Traders will keep an eye on the US Producer Price Index (PPI) and weekly Initial Jobless Claims, which will be released later on Thursday. 

Softer-than-expected US inflation in May has prompted traders to raise their bets on a Federal Reserve (Fed) rate cut. This, in turn, drags the Greenback lower and lifts the USD-denominated commodity price. The CME FedWatch tool showed the markets have priced in nearly a 68% possibility that the US central bank would cut rates by 25 basis points (bps) by September, compared with 57% before the US CPI data. They now also see a still small but rising chance of an earlier rate cut, putting about an 18% odds of that happening in July versus about 13% earlier on Wednesday.

Reuters reported on Wednesday that the United States (US) is planning a partial evacuation of its Iraqi embassy and will allow military dependents to depart places around the Middle East, citing security risks in the region. Geopolitical risks could underpin the Silver price as investors seek more holdings in safe-haven assets.

On the other hand, White House envoy Steve Witkoff is scheduled to meet Iranian Foreign Minister Abbas Araghchi in Muscat on Sunday and discuss the Iranian response to the recent US proposal, per Axios. Any positive developments surrounding a deal over the nuclear program between the US and Iran might cap the upside for the Silver. 

Fed Rate Cut Expectations Boost Gold Prices Forecast

Wednesday’s U.S. Consumer Price Index (CPI) showed inflation rose just 0.1% in May, below the 0.2% forecast. On a year-over-year basis, CPI increased 2.5%. The softer-than-expected data pushed the dollar index (DXY) down 0.3% to a two-month low, making gold more attractive to foreign buyers.

Markets are now pricing in at least 50 basis points of rate cuts this year, with traders assigning a 68% probability of a cut by September. Declining Treasury yields added fuel to gold’s rally, with the 10-year yield falling to 4.387% and the 2-year at 3.926%. Lower yields reduce the opportunity cost of holding non-yielding assets like gold.

Geopolitical Risk and Trade Tensions Add Safe-Haven Appeal

Geopolitical risk remains a supportive factor. U.S. President Donald Trump said U.S. personnel were being repositioned in the Middle East due to growing tensions with Iran, reaffirming that Iran would not be allowed to develop nuclear weapons. In parallel, U.S.-China trade negotiations made headlines after Trump confirmed a finalized deal that includes China supplying rare earth materials and the U.S. easing restrictions on Chinese students.

The trade agreement helped stabilize market sentiment, but underlying risks remain. Comments from Goldman Sachs suggested that if inflation remains subdued or the job market weakens, the Fed may be forced to ease monetary policy sooner than planned.

All Eyes on PPI as Gold Tests $3400 Barrier

Traders now await U.S. Producer Price Index (PPI) data for confirmation of disinflation trends. A weaker-than-expected print could reinforce bets on Fed easing and push gold through key resistance.

Gold Price Outlook: Bullish Momentum Strengthens

Platinum price succeeded by forming extra bullish waves, to settle near 1275.00 level that formed the previously awaited main target, then forming sideways trading due to stochastic attempt to exit the overbought level as appears in the above image.

 

We expect the affection of the price by the sideways bias domination temporarily, but its stability above $1223.00, which forms new support against the bullish trading will increase the chances for gathering the positive momentum, to expect the attempt of targeting $1302.00 level, to form a new extra target for the current trading.

 

The expected trading range for today is between $1245.00 and $ 1302.00

 

Trend forecast: Bullish

Platinum price succeeded by forming extra bullish waves, to settle near 1275.00 level that formed the previously awaited main target, then forming sideways trading due to stochastic attempt to exit the overbought level as appears in the above image.

 

We expect the affection of the price by the sideways bias domination temporarily, but its stability above $1223.00, which forms new support against the bullish trading will increase the chances for gathering the positive momentum, to expect the attempt of targeting $1302.00 level, to form a new extra target for the current trading.

 

The expected trading range for today is between $1245.00 and $ 1302.00

 

Trend forecast: Bullish