Gold and Oil Prices Decline Amid Improving Geopolitical Relations and Diminished Rate Cut Hopes

Gold and oil prices are experiencing sharp fluctuations driven by geopolitical developments and fading expectations of a swift U.S. interest rate cut.

Contents

Gold
Oil

Gold

Declines Amid Weak Demand and Reduced Rate Cut Bets

Gold prices stabilized on Thursday after a sharp drop of over 2% on Wednesday,
as demand for the precious metal as a safe haven weakened and expectations of interest rate cuts by the U.S. Federal Reserve diminished.

Spot gold rose slightly by 0.2% to $3,182.85 per ounce as of 8:04 a.m. in Singapore, remaining near its lowest level in over a month.
During early trading, prices hovered above $3,182 per ounce,
influenced by rising U.S. Treasury yields amid optimism that the Fed might delay rate cuts due to improving economic indicators.

Gold typically has an inverse relationship with interest rates, as higher yields reduce its appeal given that it does not generate income.

Trade Talks Reduce Gold’s Safe-Haven Appeal

Downward pressure on gold prices was further driven by continued progress in U.S.–China trade negotiations.
On Wednesday, China announced the suspension of restrictions on exports of rare earth metals and certain technologies
—moves that were welcomed by markets and seen as signs of easing geopolitical risks.

This diplomatic progress reduced demand for gold as a safe-haven asset and led to a sharp rally in riskier assets.
Nevertheless, gold remains up by more than 20% since the beginning of 2025,
after reaching a peak above $3,500 per ounce in April, driven by fears of inflation, slowing growth,
and potential recession amid prior tariff tensions.

Oil

Oil Prices Continue to Decline Amid Optimism Over a Nuclear Deal with Iran

WTI crude nears $62 while Brent settles around $66 per barrel

Oil prices extended their losses for a second straight day, as West Texas Intermediate (WTI) fell close to $62 per barrel,
and Brent crude closed near $66, following a report suggesting Iran is willing to abandon its military nuclear ambitions in exchange for lifted U.S. sanctions.

NBC reported, citing senior Iranian advisor Ali Shamkhani,
that Tehran is open to signing an agreement under specific conditions—fueling optimism about the return of Iranian oil to global markets
and contributing to the latest price drop.

U.S. Inventory Build Adds Pressure

These developments came after government data revealed the largest weekly build in U.S. crude inventories since March,
ending a four-day rally that saw prices gain nearly 10%.

Despite recent fluctuations, oil remains down approximately 13% year-to-date, amid ongoing signs of an oversupplied market.

Gradual Resumption of OPEC+ Supply

Meanwhile, OPEC+ began gradually restoring oil supply last month after halting production since 2022.
However, the group added only 25,000 barrels per day in April, far short of its planned increase of 138,000 barrels per day.
The alliance is expected to review another potential output hike at its next meeting scheduled for June 1.

Separately, the International Energy Agency (IEA) is set to publish its monthly global supply and demand outlook on Thursday from Paris,
a report closely monitored by investors and traders alike.

Gold and Oil Prices Decline Amid Improving Geopolitical Relations

Gold and Oil Prices Decline Amid Improving Geopolitical Relations

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