Volatility in Commodity Markets Oil and Gold in the Spotlight

The global commodities market is experiencing a state of anticipation and fluctuation,
driven by intertwined geopolitical and economic factors—most notably, the prices of oil and gold.
While declining oil inventories point to a potential supply shortage, gold continues its upward trajectory,
supported by strong demand from central banks and investors seeking safety amid global economic uncertainty.

Contents

Oil
Gold

Oil

Cautious Stability Amid Inventory Decline and Diverging Outlooks

Oil prices have shown relative stability following the largest drop in U.S. crude inventories since December,
heightening concerns about a near-term supply shortage.
Brent crude traded near $74 per barrel, while West Texas Intermediate (WTI) fell below the $70 mark.

According to government data, U.S. crude inventories declined by 3.34 million barrels last week,
pushing gasoline stocks lower as well—reflecting growing demand and tightening supply.

Since early March, U.S. sanctions and tariffs—imposed by President Donald Trump’s administration
—have supported the rise in oil prices, amid fears of supply disruptions from countries like Iran and Venezuela.
This has led traders to purchase bullish oil options as a hedge against further price increases.

Despite this momentum, the outlook remains divided.
Major oil trading companies such as Trafigura and Gunvor remain pessimistic about the continuation of the price rally,
citing abundant supply—particularly from outside the OPEC+ alliance.
The alliance is also expected to begin gradually increasing output in the coming period,
as part of a planned effort to reintroduce suspended supplies to the market.

Gold

A Historic Rally Driven by Central Bank Buying and Investor Sentiment

Gold continues to post strong gains, buoyed by optimistic forecasts from leading financial institutions,

most notably Goldman Sachs, which raised its year-end price target to $3,300 per ounce.
The bank attributes this to stronger-than-expected demand from central banks and significant inflows into gold-backed exchange-traded funds (ETFs).

Goldman Sachs analysts Lina Thomas and Dan Struyven noted that official gold demand could average around 70 tons per month this year,
up from their previous estimate of 50 tons.
The precious metal surpassed the psychologically important $3,000 per ounce threshold for the first time,
marking a 15% increase so far this year, bolstered in part by the Federal Reserve’s ongoing monetary easing policy.

Central banks—particularly in emerging markets—appear to be rapidly accumulating gold.
Reports suggest that countries like China may continue to amass gold at a fast pace for at least the next three years.
These developments are seen as a structural shift in reserve management strategies,
further reinforcing steady demand for gold in the foreseeable future.

As for gold-backed ETFs, inflows have surprised analysts, indicating a renewed appetite among investors for hedging against market volatility.
If this trend continues, prices may reach new record highs—potentially surpassing $3,680 per ounce by year-end,
a level last seen during the peak of the COVID-19 pandemic in 2020.

Volatility in Commodity Markets Oil and Gold in the Spotlight

Volatility in Commodity Markets Oil and Gold in the Spotlight

Related Topics