Spot gold prices edged lower during Asian trading hours on Thursday. At the time of writing, spot gold was quoted at $5,143.97 per ounce, down 0.61%, after hitting an intraday high of $5,182.21 and a low of $5,124.79. Rising international oil prices, now above $92 per barrel, have increased inflation expectations, leading markets to scale back bets on Federal Reserve interest rate cuts. The prevailing view now anticipates only one potential rate cut within the year. Concurrently, a stronger US dollar index and rising US Treasury yields have increased the opportunity cost of holding non-yielding gold, putting downward pressure on its price.

According to the latest data from the CME FedWatch Tool, market participants assign a 99.4% probability that the Fed will maintain the current interest rate at its March meeting, with just a 0.6% chance of a 25-basis-point cut. Expectations for no policy change in March are largely priced in. Looking ahead to subsequent meetings, the probability of a cumulative 25-basis-point cut by April is 11.9%, while the likelihood of unchanged rates stands at 88.1%. The chance of a cumulative 50-basis-point cut by April is a mere 0.1%.

By June, the probability of a cumulative 25-basis-point rate cut is 33.8%, slightly lower than previous readings, indicating that market expectations for a mid-year rate cut continue to diminish. Recent robust US economic data, combined with upward pressure on oil prices from Middle East conflicts, has led markets to repeatedly push back the anticipated timing of the first rate cut. Federal Reserve officials have generally maintained a hawkish stance, and markets will continue to monitor upcoming inflation data and policy signals for changes.

Tensions have escalated as Iran has directly targeted the global energy supply chain. Multiple commercial vessels have been attacked in the Strait of Hormuz, with Iranian forces reportedly laying naval mines in an attempt to disrupt a channel responsible for over 20% of global oil shipments. A statement from the Iranian military command warned the world to "prepare for oil at $200 per barrel."

This rhetoric instantly fueled market panic. Analysts noted that a proposal from the International Energy Agency to release 400 million barrels from strategic petroleum reserves would likely be insufficient to calm the ripple effects of a major supply disruption. Oil prices surged over 4% on Wednesday, with US crude futures closing up 4.6% and Brent crude finishing 4.8% higher. The conflict is no longer distant news but a direct threat to global supply chains.

In other developments, the world's largest gold-backed ETF, the SPDR Gold Trust, reported a daily increase in holdings of 3.716 tonnes. Its total holdings now stand at 1,077.281 tonnes.

In yesterday's trading session, the gold market opened at $5,190.3, initially climbed to a daily high of $5,223.6, then experienced a sharp pullback to a low of $5,154.6 before consolidating within a range. The session ultimately closed at $5,177, forming a spinning top candlestick pattern on the daily chart. Following this pattern, there remains potential for buying on dips in today's session. From a technical perspective, after reducing exposure on long positions initiated at $4,400 and $4,670, stop-losses should be adjusted to $4,700. If prices decline early in the session today, consider buying around $5,120, with a stop-loss at $5,114. Initial targets are set at $5,150, $5,165, $5,176, $5,183, and the $5,200-$5,212 range.