Middle East Tensions Escalate as Australia’s GDP Rises 0.8% in Q4

Heightened geopolitical uncertainty pushed investors toward defensive positioning, weighing on global equities and lifting energy risk premiums.

Tensions in the Middle East continued to escalate relentlessly into this week, with reports indicating the US Navy may begin escorting tankers through the Strait of Hormuz. Heightened uncertainty weighed on global equities, with the S&P 500 retreating to its lowest level in over two months as markets reassessed the potential for a broader US involvement in the region.

Domestically, the ASX edged lower as weakness in gold miners offset an otherwise positive economic backdrop. According to ABS data, Australia’s economy expanded 0.8% in the December quarter and 2.6% year-on-year, with GDP per capita rising for a fourth consecutive quarter — up 0.9% from a year earlier, the strongest annual pace since late 2022. The result keeps the RBA’s policy outlook in focus and offers a degree of support for the Australian dollar as investors reassess the interest rate trajectory.

In commodity markets, Brent crude extended its rally to reach its highest level since 2024, driven by supply concerns stemming from regional tensions. Gold faced headwinds from a firmer US dollar and reduced expectations for near-term rate cuts amid rising inflation concerns. The US dollar index gained 0.8% on the day, while the Australian dollar slipped to US70.4 cents.

This week, we take a closer look at three key markets in focus: Oil, Gold, and the ASX 200.

Oil: 30% up year to date with $90 just in view

Brent crude has cleared the $80 resistance level decisively, rallying more than 30% year to date. Prices are now testing the $85 level, with RSI in overbought territory and MACD beginning to turn higher. In an environment driven by supply-side disruptions, momentum indicators may remain elevated for an extended period. A hold above the $82 support level would keep the $90 psychological target in view, with $100 as the next major level beyond that.

Gold: The Ultimate Safe Haven Faces a Strong Dollar Test

Despite its role as a traditional safe-haven asset, gold is navigating a more challenging environment amid a strengthening US dollar. Having pulled back from a recent peak near $5,400/oz, prices are consolidating as they approach the $5,000 level. That said, the broader bullish structure remains intact — prices continue to trade above all major moving averages, with the ascending channel holding. Key support levels to monitor are $5,145, followed by the significant psychological threshold at $5,000.

ASX 200: A near-term consolidation after record run

The XJO is consolidating within a rising wedge formation after printing a fresh high of 9,221 in early 2026, now pulling back to 8,941. Price has slipped below the short-term SMA (9,007) — a mild bearish signal near-term. Key support sits at 8,880 (SMA) and 8,765, with downside risk to 8,769 if the wedge breaks lower. MACD is crossing bearish near the zero line, suggesting momentum is fading. RSI at 46.9 confirms softening but is not yet oversold, leaving room for further downside. In the near term, should geopolitical risk continue to dominate sentiment, closely watch 8,880 support as a close below opens a retest of 8,765.

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