Gold Gains and Oil Falls Amid Market Dynamics

Global commodity markets are witnessing a noticeable divergence,

with gold prices continuing to climb while oil prices decline due to a mix of economic and political factors.

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Gold
Oil

Gold

Continues to Rise, Supported by Expectations of a Larger Rate Cut

Gold prices rose for the third consecutive day, with the precious metal trading near $3,370 per ounce,

supported by a sharp drop in U.S. Treasury yields and growing expectations that the Federal Reserve may opt for a larger interest rate cut.

The rally followed comments from U.S. Treasury Secretary Scott Bessent,

who urged the central bank to reduce borrowing costs by about 1.5 percentage points from current levels — a move that could stimulate economic activity and push investors toward non–interest-bearing assets like gold.

The shift in market expectations is clear compared to last month,

when the odds of a September rate cut were below 50%. Now, there is near consensus on a 0.25% cut next month,

with some investors betting on an even larger move — a sentiment that has further bolstered gold prices.

Since the start of the year, gold has gained more than 28%, with most of the gains occurring in the first four months.

The rally has been fueled by escalating geopolitical and trade tensions, along with increased central bank purchases,

reinforcing gold’s status as a safe-haven asset in times of uncertainty.

In early Singapore trading, spot gold rose 0.5% to $3,372.03 per ounce, while Bloomberg’s spot dollar index fell 0.1%.

Silver, platinum, and palladium also posted slight gains, signaling continued positive momentum in precious metals markets.

Markets remain watchful over whether U.S. imports of gold bullion will be subject to tariffs, following recent confusion that widened the spread between New York futures and London spot prices. U.S. President Donald Trump’s statement that he would not impose tariffs helped ease concerns, but the lack of official details has kept traders cautious.

Oil

Drops to Two-Month Lows on Oversupply Concerns

In contrast, oil prices have fallen close to their lowest levels in two months,

after the International Energy Agency (IEA) warned that the crude market could face a record supply surplus next year.

Brent crude hovered around $66 per barrel after closing yesterday at its lowest level since June 5,

while West Texas Intermediate (WTI) traded near $63 per barrel.

The IEA’s monthly report indicated that global inventories are expected to grow at a faster pace than during the pandemic year of 2020,

reflecting oversupply driven by higher production outside the OPEC+ alliance — particularly in the United States and Latin American countries.

Investors are also closely watching the upcoming summit between U.S. President Donald Trump and Russian President Vladimir Putin,

which could result in changes to U.S. sanctions on Russia, an OPEC+ member. In strong remarks,

Trump warned of “severe consequences” if a ceasefire is not agreed, adding a geopolitical layer to oil price movements.

Since the start of the year, oil has fallen more than 10%, particularly after OPEC+ ended the voluntary production cuts that began in 2023. Recent U.S. government data showed crude inventories rose by about 3 million barrels last week to the highest level in two months, along with increases in distillate stocks and supplies at the main storage hub in Cushing, Oklahoma.

The prompt Brent spread — the difference between the nearest two contracts — narrowed to 49 cents per barrel from about $1 a month ago,

signaling that near-term supply tightness in the global market is easing.

Gold Gains and Oil Falls Amid Market Dynamics

Gold Gains and Oil Falls Amid Market Dynamics

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