Domestic Gold Bullion Prices Under Pressure Despite Geopolitical Tensions

JAKARTA, Jakartaweekly.com—Global gold prices and domestic gold bullion are expected to remain volatile with a downward bias. For domestic gold bullion, prices are expected to trade within a range of Rp2,430,000 to Rp2,720,000 per gram this week. The main drivers are escalating geopolitical tensions in the Middle East, particularly threats of blockades in the Red Sea and the Strait of Hormuz.

Ibrahim Assuaibi, Director of PT Traze Andalan Futures, said global gold prices are likely to trade within a range of US$3,856 to US$4,149 per troy ounce this week. Global gold prices closed at US$4,016 per troy ounce at the end of trading on Saturday, July 18, 2026.

According to Ibrahim, the first support level for global gold is US$3,970 per troy ounce, followed by a second support level at US$3,856 per troy ounce. If prices move higher, the first resistance level is projected at US$4,063, with the second resistance at US$4,149 per troy ounce.

“For domestic gold bullion, prices are expected to trade within a range of Rp2,430,000 to Rp2,720,000 per gram over the coming week,” Ibrahim said recently. 

At the close of last week’s trading, domestic gold bullion settled at Rp2,614,000 per gram. The first support level is estimated at Rp2,590,000, followed by a second support at Rp2,430,000. If global gold prices rise, domestic bullion could reach a first resistance level of Rp2,634,000 and a second resistance level of Rp2,720,000 per gram.

However, Ibrahim expects global gold prices to weaken due to the possibility of further interest rate hikes by the US Federal Reserve. The outlook is shaped by persistent global uncertainty and rising geopolitical risks.

Middle East Conflict Fuels Oil Price Concerns

Geopolitical tensions have intensified once again following the escalation of the conflict in the Middle East after the United States targeted infrastructure in Iran. In response, Iran launched large-scale attacks on US military bases across the region.

Ibrahim noted that Iranian media reported US strikes targeting five bridges near Abbas Airport, triggering strong reactions in Iran, particularly from Mojtaba Khamenei, whom he described as Iran’s third supreme leader.

Meanwhile, the United States officially imposed a naval blockade on all Iranian ports and coastal areas starting July 14, 2026. Iran has also urged Yemen’s Houthi movement and Lebanon’s Hezbollah to attack Israeli and US facilities. The Houthis have reportedly prepared to fully blockade oil shipping routes through the Red Sea.

“This blockade will push crude oil prices higher. Transportation costs and logistics expenses will increase, which will eventually drive inflation higher and affect the prices of many downstream goods,” Ibrahim explained.

Crude Oil Expected to Rise Sharply

Ibrahim forecasts a significant increase in crude oil prices. After WTI crude closed at US$82 per barrel on Saturday morning, it is expected to trade within a range of US$70.20 to US$95 per barrel this week. Meanwhile, Brent crude closed at US$88.10 per barrel and is projected to move between US$85 and US$100 per barrel.

According to Ibrahim, both WTI and Brent are likely to record substantial gains.

In Eastern Europe, sporadic Russian attacks on Ukraine have also intensified, while Ukraine continues targeting Russian territory, particularly oil refineries. He believes these attacks have slightly reduced Russia’s oil production, providing additional support for both Brent and WTI crude prices.

US Politics Adds to Market Uncertainty

On the political front, the ongoing conflict has reignited criticism of President Donald Trump from members of Congress.

With the US midterm elections for the House of Representatives approaching, Republicans are increasingly concerned that Democrats could capitalize on the war by highlighting rising inflation, increasing prices of essential goods, and higher gasoline prices.

“For Democrats, this creates an advantage in campaigning across the states. For Republicans, it is a major setback because many of their voter bases could shift to the Democrats, further heating up the political landscape,” Ibrahim said.

Inflation Could Keep the Fed Hawkish

Before the Middle East conflict intensified again in July 2026, both the Consumer Price Index (CPI) and Producer Price Index (PPI) had shown signs of easing.

However, Ibrahim believes the renewed escalation could push inflation higher again, prompting the Federal Reserve to keep interest rates elevated or even raise them further.

He emphasized that the Fed has repeatedly stated inflation remains the primary factor guiding its monetary policy decisions and that the central bank will not be influenced by political pressure from Donald Trump.

If crude oil prices continue rising because of geopolitical tensions in the Middle East, especially if the Strait of Hormuz and the Red Sea are disrupted or closed, oil prices could surge significantly.

“That would likely lead the Federal Reserve to focus even more closely on inflation. If inflation remains high, the Fed could raise interest rates more than twice, which would put downward pressure on both global gold prices and domestic gold bullion,” Ibrahim explained.

Central Banks Continue Accumulating Gold

Despite expectations of weaker gold prices, central banks continue increasing their gold reserves.

In the first quarter of 2026, the Federal Reserve held 244 tons of gold reserves, while second-quarter data have yet to be released.

“Global central bank gold reserves increased by 17% compared with the previous quarter. This shows that central banks are purchasing gold not like retail investors, but as part of a long-term strategy to safeguard foreign exchange reserves amid global uncertainty, rising geopolitical risks, and changes in the international financial system,” Ibrahim said.

Gold continues to be viewed as a reliable store of value. Ibrahim also expects the Indonesian rupiah to remain under pressure, adding that a weaker rupiah could partially offset the decline in domestic gold bullion prices even if global gold prices soften.