Financial Markets

Gold hits seven-week low; silver follows suit and records a nearly 5 percent loss.

Gold prices are falling as concerns of rising fuel prices stoke inflation worries on the back of the war between the United States and Iran.

Spot gold prices fell by 3.3 percent to reach a more than seven-week low at $4,146.51 per ounce on Monday.

Rising oil prices, a higher US dollar and Treasury yields stoked inflation concerns, creating further headwinds for the metal.

This is the lowest level for gold values since August 5. US gold futures also fell by 3.3 percent to $4,178.40.

Although gold is traditionally considered an inflation hedge, higher interest rates dent ⁠its appeal as investors prefer yield-bearing assets.

“There might be no notable direct impact on regular people due to that. However, investors who had turned to gold will see a hit, especially under the current high inflation rates,” Sherif Othman, CEO of the Maryland-based Poise Investment Advisors, told Al Jazeera.

“Gold does not yield interest, so when Treasury yields go up, investors turn away from gold, impacting its value”, he added.

The Fed lifted benchmark rates by a quarter ⁠percentage point earlier this month and flagged that at least one more hike is likely in the coming months.

The US dollar was steady near a two-month high, and oil prices spiked about 3 percent as US President Donald Trump rejected an Iranian offer ⁠to resolve the conflict and reopen the Strait of Hormuz.

Such factors triggered several policymakers to warn that inflation risks remain elevated and that interest rates may need to rise, with Cleveland Fed President Beth Hammack among the latest officials to reiterate that view.

Higher Treasury yields and the US dollar are “creating a perfect storm to push the metals prices sharply lower,” according to Jim Wyckoff, a market analyst at American Gold Exchange.

Spot silver also fell by 4.7 percent to $61.27 per ounce, platinum declined 2.9 percent to $1,726.30 and palladium lost 4.4 percent to $1,211.45.

The lawsuit comes two months after the state filed a similar lawsuit against competitor Kalshi.

New York State has filed a lawsuit against prediction market company Polymarket amid allegations that it violated state laws against illegal gambling.

The suit, filed on Thursday by New York State Attorney General Letitia James, comes two months after the state filed a similar lawsuit against competitor Kalshi. That followed the state suing Coinbase and Gemini for offering users the ability to bet on “sports, entertainment, and elections, in violation of New York laws”, according to a release from the attorney general’s office at the time.

The state accused all the companies of operating without licences from the State Gaming Commission.

“Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs,” James said in a statement announcing the suit.

“By skirting New York’s laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support. My office will never hesitate to take action to defend our laws and keep New Yorkers safe.”

The suit also alleges that the company encouraged gambling among young people. It accuses Polymarket of targeting users as young as 18, while state law requires users to be at least 21 years old to take part in mobile sports betting.

“By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law, they have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming,” New York Governor Kathy Hochul said in a statement.

The more than 30-page lawsuit claims that Polymarket, which is valued at more than $20bn, has advertised sports betting in particular since July 2025. It pointed to a post on X from August 17, 2025, about the launch of its US mobile app that said it was “BAD NEWS (For sportsbooks)”.

Prediction markets allow users to wager on so-called event contracts, covering political events, sports, elections and even award shows. Concerns about the role of prediction markets came to a head earlier this year when wagers were made in the hours before the United States and Israel first struck Iran, prompting widespread backlash in Washington.

Polymarket pushed back on the allegations.

“We chose to engage with them directly on the substance and address their concerns,” chief legal officer Neal Kumar said in a statement.

“They preferred the media hit. Any time the [attorney general’s] office wants to swing by, our door is open for a conversation about how we protect consumers and offer fair, transparent and legal markets.”

Kalshi is facing similar allegations in New York State. Kalshi has been critical of reporting on lawsuits against it and allegations that it is akin to a sports betting or gambling platform.

Polymarket did not respond to Al Jazeera’s request for comment.

The Polymarket lawsuit comes days after reporting from the Wall Street Journal that alleged a wave of users had linked stolen bank debit cards and then used them to make wagers, effectively draining the accounts. According to the report, when CEO Shayne Coplan was made aware of the issue, he responded: “Just keep growing and pay a fine if regulators ever find out.”

Political pressure

New York State’s lawsuit joins a growing list of states that have sued prediction market platforms, including Arizona, Massachusetts, Nevada and many others. Those states are at odds with the federal government, as the Commodity Futures Trading Commission has claimed that the federal agency exerts authority over the regulation of prediction markets.

Polymarket has close ties with the family of US President Donald Trump. The prediction market platform has investment from 1789 Capital, a venture capital firm backed by Donald Trump Jr, the president’s eldest son, who also serves on the company’s advisory board.

Investors shrug off AI safety concerns and Iran war, sending market to a new peak.

Wall Street’s Nasdaq stock exchange has hit an all-time high, shrugging off concerns about AI safety risks, sky-high tech valuations and the energy shock caused by the United States’ war on Iran.

The Nasdaq Composite index, which is dominated by US tech giants such as Nvidia, Apple and Microsoft, rose 0.45 percent on Tuesday, taking its gains to date this year to more than 17 percent.

The Nasdaq 100, a narrower index that tracks 100 top companies, jumped 0.82 percent.

The S&P 500, the most popular measure of the overall US stock market, closed essentially flat.

Monolithic Power Systems, a Florida-based manufacturer of power circuits, and Canadian e-commerce company Shopify led the gains, surging 8.1 percent and 7.1 percent, respectively.

Micron Technology, one of the world’s top three memory chip makers along with South Korea’s SK Hynix and Samsung Electronics, rose 5 percent.

Chip giant Nvidia, the world’s most valuable company, gained 0.7 percent, while Apple edged up 0.2 percent.

Meta Platforms, which soared 11.4 percent on Monday on excitement surrounding its new AI assistant Muse, dropped 0.63 percent.

Major Asian stock markets opened higher on Wednesday, with Japan’s benchmark Nikkei 225 and South Korea’s Kospi up about 1.4 percent and 0.1 percent, respectively, in morning trading.

Hong Kong’s Hang Seng Index opened lower, falling more than 0.7 percent during the morning trade.

Oil prices were largely flat on Tuesday, after falling more than 3 percent the previous day amid improving oil flows out of the Gulf and hopes of renewed diplomacy between Washington and Tehran.

Futures for Brent crude, the international benchmark, were trading at $99.18 a barrel as of 01:00 GMT.

⁠US President Donald Trump on Tuesday told reporters that US officials ‌held a “very good” meeting with their Iranian counterparts on the sidelines of the United Nations General Assembly in New York, hours after using his address to the session to warn that he could “annihilate” Iran if Tehran did not agree to a deal on the war.

Trump, whose war on Iran is nearing the seven-month mark, said US and Iranian officials would hold another round of talks in the “very near future”.

Jay Goldberg, a senior analyst at Seaport Research Partners in San Francisco, said signs of diplomatic progress between the US and Iran had refocused investor attention on the potential of AI to generate profits after years of multibillion-dollar investments.

“We have been searching for a clear consumer use case to justify the AI spend, and many see Muse as just that product,” Goldberg told Al Jazeera.

“Personally, I think Muse is just a step in the right direction; there will be better products – probably soon – but Muse is one of those things that are so useful they get investors excited about AI prospects again,” Goldberg said.

Bank of Japan raises benchmark interest rate from 1 to 1.25 percent, pledging to help counter inflation risks.

The Bank of Japan (BoJ) has raised interest rates by 0.25 to 1.25 percent, pushing borrowing costs to their highest level in 31 years, amid rising inflation and wages, and pressure from Washington.

The move on Friday marked the first hike since June, and takes interest rates closer to levels the BoJ deems neutral to the economy, marking another step away from decades of ultra-low rates that cemented the yen’s status as a cheap global funding currency.

Japan is grappling to contain inflation, which is being driven by factors including rising energy prices, global supply pressures and domestic inflation exceeding the 2 percent target.

Core consumer inflation held steady near the target in August, data showed on Friday, as companies continued to pass on rising costs for a wide range of food and grocery items.

The country also faced a “slow-moving demographic shock” with a shrinking labour pool lifting wages, a structural factor that ⁠cannot be dismissed as temporary, BoJ Executive Director Koji Nakamura said on Monday.

The Federal Reserve’s rate hike on Wednesday, and the prospect of another one later this year, have added pressure on the BoJ to keep pace.

Further widening of the United States-Japan rate gap risks weakening the yen and lifting inflation through higher import costs, analysts told the Reuters news agency.

Its policy rate also remains lower than the European Central Bank, which raised its key rate to 2.5 percent last week.

Such pressure could affect the tone of BoJ Governor Kazuo Ueda’s post-meeting briefing, which will be closely watched by markets for clues on the timing and pace of further increases.

Iran’s missiles and drones have downed dozens of US aircraft, damaged or destroyed hundreds of the United States’ buildings at its bases in the Middle East, and drained its inventories of military equipment worth billions of dollars, the Pentagon conceded earlier this week.

On Wednesday, Tehran unleashed another unlikely weapon in its war against the US: a maths equation.

Iranian Parliament Speaker Mohammad Bagher Ghalibaf, who has also been a lead negotiator during talks between Tehran and Washington at different stages during the past six months, typed out a version of the Taylor equation, a formula used by central banks to determine interest rates, in a post on X loaded with a wartime message.

“Let’s see if a hike could open SOH or produce a single barrel,” he wrote, referring to interest rate hikes and the Strait of Hormuz, a crucial waterway Iran has effectively blocked for global shipping.

“You can’t 25bp [basis points] a chokepoint,” he added, seemingly again referring to the strait. “It’s SOH risk premium, and We set it.”

Hours after Ghalibaf’s post, the US Federal Reserve did raise the benchmark interest rate by 25 basis points.

Early in the war, which was launched by the US and Israel against Iran on February 28, Ghalibaf frequently used financial arguments to mock how the conflict was being conducted by the administration of US President Donald Trump, to point to Iran’s ability to hurt Washington economically unless it changed its approach.

Now he’s turned to maths.

“This is a spectacular bit of agitprop from Iran, a country which, if nothing else in 2026, has demonstrated an impressive ability to needle its US opponent,” Chris Beauchamp, chief market analyst at IG Group, told Al Jazeera.

But what exactly is Ghalibaf trying to say? What is the Taylor equation, has the Iran war influenced the US interest rate, and does Tehran “set it”, as the parliament speaker has suggested?

What is the Taylor equation that Ghalibaf cited?

The rule is a formula economists use to estimate where a central bank should set interest rates based on inflation and the strength of the economy.

Developed by economist John Taylor in the early 1990s, the rule links the US federal funds rate to inflation and the “output gap” – the difference between actual economic output and its potential.

In its simplest form, the formula is:

Interest rate = inflation + 0.5(output gap) + 0.5(inflation − 2%) + 2%.

This means the recommended interest rate rises when inflation moves above the 2 percent target or when economic output exceeds its potential. It falls when inflation weakens or the economy operates below potential.

However, the equation is a benchmark, not a set rule that is strictly followed. Policymakers at the US Federal Reserve weigh other economic factors when setting interest rates.

Is the Iran war a factor in the US interest rate hike?

Trump’s tariffs, the energy shock following the US-Israeli war with Iran, and heavy investment associated with the artificial intelligence boom, taken together, have kept inflationary pressures strong, experts say.

On Wednesday, when the US Federal Reserve raised interest rates by 25bp, it was the first increase in three years.

Fed Chairman Kevin Warsh, in his speech following the rate hike, said renewed fighting between the US and Iran, which has pushed up petrol prices, helped convince Fed officials to support higher rates.

“There’s no hiding from hot spots around the world,” Warsh said.

IG Group’s Beauchamp said, “The Iran war, indirectly, is a huge driver of last night’s hike, though no one wants to admit it.”

“The energy spike has combined with the rise in yields to drive the Fed into a corner with no way out,” he said.

Susannah Streeter, chief investment strategist at the Wealth Club, said there is “no denying” that Iran’s retaliatory action against the US and its allies across the Gulf region has “intensified concerns about energy supplies and led to hotter inflation forecasts”.

“The ongoing geopolitical turmoil and elevated crude prices certainly were key issues behind the Fed’s decision to hike rates,” she said.

Is Iran ‘setting’ the US interest rate?

In short, no.

Wealth Club’s Streeter cautioned that while the war in the Middle East and rising oil prices were certainly an element in the Fed’s decision, they weren’t the “only factors at play”.

“The spending might of AI hyperscalers has also pulsed through the veins of the economy, with strong capital investment and resilient domestic demand adding to inflationary pressures, so policymakers will have been looking at the whole picture,” she noted.

“So, while Tehran has arguably had an influence on some of the forces feeding into US monetary policy, particularly through the impact of the conflict on oil supplies and prices, it is not ‘setting’ US interest rates.”

Streeter said the US Federal Reserve was responding to a much broader set of economic conditions.

“Iran’s actions have affected the inflation outlook, but the decision on where to set interest rates ultimately rests with the Federal Reserve, and there are plenty of other data points policymakers use,” she noted.

What’s behind Ghalibaf’s maths mocking?

In March, Iran’s parliamentary speaker had repeatedly used social media to comment on markets and energy prices, including mocking efforts by the Trump administration to influence oil futures and arguing that financial manoeuvring could not create “actual fuel” at petrol stations.

Last month, Ghalibaf posted a graphic bearing the phrase “Make America Hungry Again” – a play on Trump’s slogan “Make America Great Again” – together with statistics on food insecurity and hunger in the US.

“You can’t cover up defeats with false claims,” he said.

DEVELOPING STORYDEVELOPING STORY,

The 25 basis-point hike is the first raise in three years and comes ahead of critical midterm elections in the United States.

The United States Federal Reserve has said it will raise interest rates by a quarter of a percentage point as inflation, driven by soaring fuel prices amid the US-Iran war, continues to weigh on the economy.

The Fed, which is the central bank of the US, said on Wednesday that it will hike interest rates by 25 basis points to 3.75 percent to 4 percent.

It is the first hike in more than three years and comes just weeks before the US midterm elections, despite repeated demands from US President Donald Trump to lower rates.

“Economic activity is expanding at a solid pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient,” the Fed said in a statement on Wednesday.

“Inflation remains elevated. Today’s policy action will support a timelier return to the Committee’s 2 percent goal. The Committee will deliver price stability.”

After Wednesday’s hike, Fed officials expect one more rate increase this year, according to their quarterly projections.

CME FedWatch, which tracks the likelihood of monetary policy decisions, forecast a 92.3 percent chance of the Fed increasing rates to 3.75 to 4 percent. A week ago, that forecast was a 40 percent chance of a quarter-percent rate increase.

But in the days since, a slew of data shifted those expectations.

For one, consumer prices jumped in August by 0.4 percent, the highest increase in four months. On an annual basis, prices rose 3.4 percent, matching the increase recorded in July, while the job market remains healthy.

Since then, benchmark crude oil prices have continued to soar as strikes in the US-Israel war on Iran have intensified. Brent crude hovered near $109 per barrel on Tuesday.

The average price for a gallon (3.8 litres) of petrol is $4.36, up 14 cents in the past week, and up from $4.06 in the last month, according to the American Automobile Association (AAA), which tracks daily petrol prices.

Diesel, on the other hand, was at $6.31, the highest recorded average and roughly double from a year ago. That, in turn, is expected to further stoke prices as diesel is used in trucks to haul everything from fruits and vegetables to steel and cement.

At the same time, the benchmark 10-year Treasury yield broke above the psychologically important 5 percent threshold on Tuesday, hitting 5.02 percent, its highest level in 19 years. The yield serves as a benchmark for borrowing costs, including car loans and home mortgages, and is a bellwether for inflation.

“The economy is in an unusual place,” Michael Klein, professor of international economic affairs at Tufts University’s Fletcher School and executive editor of EconoFact, a nonpartisan economic and social policy publication, as unemployment remains at a comfortable level while higher prices continue to stick, sending inflation beyond the Fed’s target of 2 percent.

“There [has been] a lot of pressure on Chairman Warsh to raise interest rates because of inflation coming in high, and that has been compounded by concerns about Trump’s pressure” as the president has continued to demand that interest rates be lowered, Klein said.

“Higher interest rates tend to weaken the economy… but if the market believes that there’s going to be a rate increase, it’s priced in already as prices move on news, so this won’t be news,” Klein said, adding that should help steady yields.

Prices spiked as attacks on oil tankers escalated in the Middle East.

Oil prices have increased by four percent, with benchmark Brent crude hitting $105 a barrel after the biggest rise in attacks on shipping since the Iran war began spurred trader concerns about further supply disruptions.

Brent crude futures were up $4.05, or four percent, at $105.26 a barrel by 1215 GMT on Thursday. United States oil topped $100 a barrel for the first time since May, as West Texas Intermediate crude futures CLc1 rose $3.99, or 4.15 percent, to $100.04.

Brent prices have surged by more than 30 percent from lows touched in early August, as a permanent agreement between the US and Iran to cease attacks never materialised and fighting resumed.

Iran-aligned Houthis seized control of Yemen’s port of Mocha on Thursday, further threatening Red Sea traffic, while Gulf traffic remains restricted through the Strait of Hormuz as tanker attacks in the region have intensified in recent days.

“The recent run-up in prices lays bare the market’s approach: this conflict will last longer than anticipated even a month ago, let alone at the beginning of the summer. If oil supply and exports are diminished, the oil balance remains tight and prices remain elevated,” PVM analyst John Evans said.

Iran said it had attacked 10 ships near the Strait of Hormuz on Wednesday, after the US hit five Iranian oil tankers. Iran’s Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.

While fears of prolonged and more severe supply disruptions in the Gulf have lifted Brent above $100, analysts say the durability of the rally will hinge on China.

Chinese demand

China, the world’s largest crude importer, has stepped up purchases in recent weeks after months of subdued demand, boosting physical crude markets, ING analysts said in a note.

If Chinese buying continues to recover, it could amplify the impact of any supply disruptions and drive prices higher, while a pullback in imports could temper market gains, ING said.

“For months, the bearish case rested on soft Chinese demand,” said David Jorbenaze, global oil market lead at commodities information provider, ICIS.

Rising oil prices have worsened worries about inflation and cranked up pressure within the bond market, helping to lower stocks again on Wall Street.

The S&P 500 fell 0.6 percent and is on track for a fourth straight loss.

The increase in oil prices has pushed the price for a gallon of regular petrol to an average of nearly $4.28 across the US, according to the American Automobile Association. That is not only costing more at the pump but also through higher prices for all kinds of products that move by truck to store shelves.

Following Thursday’s reports, traders are betting on a close to 70 percent chance the Fed will raise the federal funds rate at its meeting next week. That’s up from the 61 percent probability seen the day before, according to data from CME Group. That’s also despite President Donald Trump’s consistent lobbying for interest rates to go lower rather than higher.