Oil and Gold Markets Amid Supply Fluctuations and Economic Tensions

Oil prices stabilized after strong gains amid concerns over declining Russian supplies,
while gold reached record levels driven by economic uncertainty and escalating geopolitical tensions.

Content

Oil
Gold

Oil

Brent Crude Nears $76 Per Barrel After a 1.6% Gain in the Previous Session

Oil prices remained stable following their biggest surge in nearly four weeks,
as concerns over dwindling Russian crude supplies overshadowed worries about the impact of President Donald Trump’s tariff escalation.

Brent crude futures traded near $76 per barrel after rising 1.6% on Monday,
while West Texas Intermediate (WTI) remained above $72, sustaining a two-day gain.
Recent data revealed that Russian oil production continued to decline, staying below the country’s quota under the OPEC+ agreement,
according to informed sources.

Oil markets have experienced volatility at the start of the year,
initially driven by increased heating demand due to cold winter conditions in the Northern Hemisphere and U.S. sanctions on Russian oil. However, over the past three weeks, market sentiment has been weighed down by concerns
that Trump’s tariff policies could trigger multiple trade wars.

Impact of Tariffs and Escalating Geopolitical Tensions

Trump imposed a 25% tariff on all U.S. imports of steel and aluminum, including supplies from Canada and Mexico,
two of the country’s largest metal exporters.
These tariffs are set to take effect on March 4, with Trump indicating that they “could increase further” to bolster domestic production.

Chris Weston, Head of Research at Pepperstone, noted that assessing the actual impact of these tariffs remains challenging.
However, short-term market movements suggest that prices may have reached a temporary support level.

Additionally, Trump commented on the possibility of Israel canceling its ceasefire agreement with Hamas if hostages are not released,
raising concerns over escalating tensions in the region—an issue that could further impact global energy markets.

Signs of Supply Tightness and Rising Demand

Markets are signaling supply shortages, particularly in the Middle East,
where reduced competition from other suppliers has allowed regional producers to increase prices for their key Asian customers.
In Europe, elevated natural gas prices have made oil a more cost-effective alternative, potentially driving up demand.

Oil and Gold Markets Amid Supply Fluctuations and Economic Tensions

Gold

Gold Hits Record High of $2,942 Per Ounce Before Slight Retreat Amid Safe-Haven Demand

Gold prices soared to a record high, fueled by rising economic uncertainty after President Trump announced a 25% tariff on U.S. steel and aluminum imports. This development has driven investors toward safe-haven assets, boosting demand for gold.

The price of gold peaked at $2,942 per ounce before retreating slightly, following a 1.7% gain in the previous session. Trump stated that the tariffs, set to take effect on March 4, aim to support domestic industries and create more jobs in the U.S., warning that they “could rise further.” This bolstered gold’s appeal as a hedge against economic instability.

Sustained Rally Driven by Economic and Geopolitical Risks

Gold has surged 11% since the start of the year, repeatedly setting new records amid uncertainty surrounding U.S. trade policies and geopolitical tensions. Investors are now closely watching Federal Reserve Chairman Jerome Powell’s testimony before Congress for insights into future monetary policy directions.

Short-term inflation expectations have outpaced long-term forecasts, creating the widest gap since 2023. On Monday, the five-year breakeven inflation rate—a key market measure of inflation expectations—reached 2.64%. This could prompt the Federal Reserve to slow the pace of monetary easing, a scenario that may pose a downside risk for gold, given its non-yielding nature.

Institutional Demand Supports Gold’s Gains

In a significant move, China’s central bank increased its gold reserves for the third consecutive month in January, signaling a continued commitment to diversifying its assets despite record-high prices. Additionally, China has allowed ten of its largest insurance companies to invest up to 1% of their assets in gold for the first time—a move that could inject around 200 billion yuan ($27.4 billion) into the market, according to Minsheng Securities.

In the spot market, gold prices rose 0.4% to $2,928.36 per ounce as of 7:50 AM in Singapore.
Meanwhile, Bloomberg’s U.S. dollar index added 0.1% following a 0.2% gain on Monday.
Silver and platinum recorded slight gains, whereas palladium prices declined.

With both oil and gold navigating economic and geopolitical uncertainties, market watchers remain vigilant as these commodities continue their volatile trajectory.

Oil and Gold Markets Amid Supply Fluctuations and Economic Tensions

Oil and Gold Markets Amid Supply Fluctuations and Economic Tensions

Related Topics