Oil rises and gold declines as tension escalates between America and Iran economy

Global markets witnessed a volatile start to the week, as oil prices rose while gold prices declined, in light of the renewed military confrontation between the United States and Iran, and the concerns it raised about the security of energy supplies through the Strait of Hormuz, in conjunction with continued expectations of a rise in US interest rates.

Brent crude futures rose by 0.9%, reaching $73.27 per barrel by 06:25 GMT, and US West Texas Intermediate crude rose 1.2%, to $70.04 per barrel.

On the other hand, gold in spot transactions fell by 0.68% to $4,061.56 per ounce, while US gold futures contracts for August delivery fell by 0.48% to $4,075.35 per ounce.

These moves come after the United States and Iran exchanged strikes for several days, which highlighted the fragility of the temporary agreement to end the war between them, and once again led to a slowdown in the movement of energy shipments through the Strait of Hormuz, one of the most important sea lanes for transporting oil in the world.

Many risks

“There are still many risks facing the oil market,” ING analysts said in a note issued on Monday. “However, market players appear to be focused on what a continued recovery in oil flows might mean for the global balance.”

Despite the rise in prices, Brent crude had lost 10.6% of its value last week, recording the third weekly decline in a row, after oil shipments through the Strait of Hormuz rose to their highest levels since the outbreak of the US-Israeli war on Iran in late February.

But navigation traffic has slowed again since last Thursday after renewed attacks on ships in the strait, which prompted an exchange of strikes between the United States and Iran in the largest escalation since the signing of the interim agreement between them.

However, Axios reported that Tehran and Washington agreed to stop the latest wave of hostilities in the Gulf and resume talks on the dispute related to the Strait of Hormuz, and an American official confirmed that a similar understanding had been reached, which limited the gains in oil prices.

In a supply-related development, Saudi Aramco resumed loading crude oil in Ras Tanura, west of the Strait of Hormuz, after a pause that lasted nearly four months, coinciding with producers increasing their production and exports before reaching the interim agreement.

Loading operations continued even after the company’s helicopter crashed yesterday, Sunday, in Ras Tanura, killing 14 citizens, without announcing the causes of the accident.

Gold is under pressure from oil and interest rates

On the other hand, gold was subjected to dual pressures represented by the rise in oil prices and renewed military tensions, in addition to growing expectations of tightening US monetary policy.

According to the report, Iran had launched missiles and drones at American military sites in Kuwait and Bahrain early Sunday, following US President Donald Trump’s threat to eliminate the Iranian leadership if it did not adhere to the agreement to end the war.

Pressures on the precious metal also increased with continued expectations of a rise in US interest rates, as the CME Group’s “Feed Watch” tool indicates that traders expect three increases in interest rates from the Federal Reserve during the year, with a probability of approximately 77% for a new increase next December.

As for other precious metals:

• Silver fell 1.1% to $58.49 an ounce.
• Platinum rose 0.4% to $1,620.15.
• Palladium fell 0.4% to $1,204.25 an ounce.