Israel Nukes Oil and Gold

Trend resumption or interruption?

Not long after U.S. markets closed on Thursday, Israel Launched Major Strikes on Iran.

Crude earned a daily topping signal.

The prior signal in January 2025 was one of the parting gifts of the Biden admin: more Russia sanctions. There also was more futile hope that China and the USA would accelerate economic growth.

Going to the right side, the spike into September 2023 came ahead of the October 7 attack by Hamas.

The spike in April 2024 accompanied Iran’s large, purely-for-show response.

At every turn, it has paid to short oil on geopolitical concerns out of the Middle East, with the caveat that each of the spikes marked a peak in terms of shock.

Iran is not in a position to launch a wider war. Israel also is not in a position to launch a wider war. Only by drawing in the U.S., Russia and China could they hope to achieve a wider conflagration. The current U.S. admin, Russia and China do not want a war.

I’m not buying the hype. Short whatever instrument has a good setup. Crude failed at resistance. I went with USO puts. For longer-term, ITM puts on oil companies, out to September, make sense. For shorter-term, oil should be lower by August. Not using futures because of the asymmetry. God forbid a wider war unfolds, oil could go to $150 per barrel or beyond.

As for gold, it spiked as well.

The daily top signal in platinum turned off.

Had Israel not attacked Iran, there would likely be a broad correction in precious metals at the moment.

As noted yesterday, gold has more support for a move higher. Crude oil is facing the headwinds of a slowing global economy. A higher oil price will act like a tax on the economy, but that doesn’t mean it couldn’t go higher. Only that the higher it goes, the more disinflationary damage it will unleash elsewhere across the global economy. Assuming countries do not ramp up spending for war, but the odds favor de-escalation.