MUFG on Weekend Commodity Moves: Oil Up, Gold Stuck as Geopolitics Collide With Rate Fears - FJElite

Oil prices surged as the US and Iran sharply escalated hostilities, raising fresh concern over Middle East supply disruption. Brent rose toward USD90 a barrel and WTI to around USD84 as the latest developments included continued US strikes on Iranian military targets, Iranian attacks on shipping near the Strait of Hormuz, damage to a major Kuwaiti oil facility, and renewed Houthi threats against Saudi energy infrastructure. Vessel traffic through Hormuz has also slowed, with interceptions and reports of a ship fire near Oman adding to the uncertainty. With inventories already tight outside China, the market remains highly sensitive to any further hit to Gulf exports, leaving the near-term bias for oil prices tilted higher.

Gold, by contrast, has stayed range-bound near USD4,000 an ounce. Escalating geopolitical risk would normally be supportive, but that has been offset by growing concern that higher energy prices could keep inflation elevated and push the Fed toward another rate hike. Markets are now pricing at least one hike by year-end, which is limiting gold’s usual safe-haven support. The result is a market where oil is reacting directly to supply risk, while gold is being pulled in opposite directions by geopolitical demand and higher-for-longer rate concerns.