Oil and gold markets surge amid geopolitical and economic shifts

In recent weeks, global markets have experienced notable fluctuations, particularly in the commodities sector, with significant movements in oil and gold prices.

Oil Market Dynamics

Oil prices have risen for the second consecutive week, influenced by geopolitical developments and strategic decisions by major oil-producing entities. Brent crude futures increased by 0.3% to $72.21 per barrel, while U.S. West Texas Intermediate (WTI) crude futures climbed 0.4% to $68.32 per barrel. Both benchmarks are on track to register approximately a 2% weekly gain, marking the largest since early 2025.

A significant factor contributing to this uptick is the United States' recent imposition of sanctions targeting Chinese entities involved in the procurement of Iranian oil. The U.S. Treasury Department's measures are part of a broader strategy to curtail Iran's oil exports, aiming for a reduction of about 1 million barrels per day.

Additionally, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) have announced plans for seven member nations to reduce output by amounts ranging between 189,000 and 435,000 barrels per day until June 2026. This initiative seeks to address previous overproduction and maintain market equilibrium.

Gold Market Trends

Concurrently, gold prices have exhibited a robust performance, poised for a third consecutive weekly gain. Despite a slight decline of 0.5% to $3,029.86 per ounce on Friday, following a record high of $3,057.21 per ounce on Thursday, gold has appreciated by approximately 1.5% over the week.

Several factors underpin this surge in gold prices:

• Monetary Policy Expectations: The Federal Reserve has maintained its benchmark interest rate within the 4.25%-4.50% range and anticipates two rate cuts by the end of the year. Such expectations typically enhance the appeal of non-yielding assets like gold.

• Geopolitical Uncertainties: Escalating tensions in the Middle East, exemplified by Israeli airstrikes in Gaza, have reinforced gold's status as a safe-haven asset amid geopolitical instability.

• Economic Concerns: Persistent worries about global economic growth, exacerbated by trade tensions and potential tariffs, have driven investors toward gold as a hedge against market volatility.

In the United Arab Emirates, these global trends have influenced local markets, with 24-carat gold prices dipping by AED 0.5 to AED 365.