Crude oil and gold prices have surged due to escalating tensions in the Middle East and the ongoing conflict between Ukraine and Russia. This market reaction reflects growing demand for safe-haven assets like gold, and concerns over potential supply disruptions in the oil market.
The U.S. Defense Department’s recent announcement of deploying a missile submarine to the Middle East, alongside Israel’s preparations for a possible military response from Iran following the assassination of a Hamas leader, has heightened fears of a broader regional conflict. These developments, coupled with Russia’s evacuation of civilians from areas near Ukraine, have intensified market volatility.
On Tuesday, gold futures on Comex saw a 1.2% increase, nearing their all-time high of over $2,500 per ounce, last recorded on August 2. The rise in gold prices underscores the heightened demand for safe-haven assets amid geopolitical instability. Similarly, Brent and WTI crude oil futures rose by over 3%, reaching $81.77 per barrel and $78.25 per barrel, respectively, marking their highest levels in three weeks.
While both gold and oil prices saw a slight retreat during the Asian session on Wednesday, primarily due to a rebound in stock markets, the overall upward pressure on these commodities is expected to persist. The ongoing tensions, coupled with macroeconomic factors such as cooling inflation and anticipated rate cuts by the U.S. Federal Reserve, are likely to continue supporting the rally in gold prices.
In the oil market, OPEC+ production cuts and technical signals, such as a double-bottom pattern and WTI futures surpassing the 50-day moving average, have further bolstered bullish sentiment. With U.S. oil inventories decreasing for six consecutive weeks and OPEC’s continued output reduction, oil prices are expected to face sustained upward pressure in the coming months.
Related topics: