Gold Slips as Oil Gains Strengthen Case for Elevated Interest Rates

04 April 2025, Bavaria, Munich: Gold bars of various sizes lie in a safe on a table at the precious metal dealer Pro Aurum. (dpa)
04 April 2025, Bavaria, Munich: Gold bars of various sizes lie in a safe on a table at the precious metal dealer Pro Aurum. (dpa)
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Gold Slips as Oil Gains Strengthen Case for Elevated Interest Rates

04 April 2025, Bavaria, Munich: Gold bars of various sizes lie in a safe on a table at the precious metal dealer Pro Aurum. (dpa)
04 April 2025, Bavaria, Munich: Gold bars of various sizes lie in a safe on a table at the precious metal dealer Pro Aurum. (dpa)

Gold slipped on Tuesday as rising crude oil prices heightened inflation worries and reinforced US rate-hike expectations ahead of a Federal Reserve policy meeting.

Spot gold was down 0.2% at $4,287.69 per ounce, as of 0713 GMT, after hitting its lowest point since August 7 on Monday. US gold futures fell 0.5% to $4,328.10.

The US ‌central bank will ‌announce its policy decision at 1800 GMT ‌on ⁠Wednesday following the ⁠end of a two-day meeting. Financial markets are betting heavily that Fed policymakers will lift their benchmark rate a quarter of a percentage point to a 3.75%-4.00% range.

"How Fed Chair Kevin Warsh frames that hike will matter more than the hike itself for gold... If he casts ⁠it as the start of a meeting-by-meeting tightening ‌cycle, that would be a ‌hit to gold and to risk assets overall," IG market ‌analyst Tony Sycamore said.

"If instead he signals a preference for ‌a more measured pace, that would prove somewhat supportive for risk sentiment and for gold."

Though seen as a hedge against inflation and geopolitical risks, gold often loses appeal when rates rise ‌as they increase the opportunity cost of holding non-yielding bullion.

Data on Friday showed US consumer ⁠prices accelerated ⁠in August, while a key measure of underlying inflation posted its largest increase in four months.

On the geopolitical front, Yemen's Iran-aligned Houthis launched a fresh wave of attacks on Saudi Arabia and were digging into positions on the western coast of Yemen along the Red Sea.

Oil prices rose as concerns over supply disruptions lingered. Higher energy costs can fuel inflationary pressures across the economy.

Meanwhile, bonds slumped, sending benchmark 10-year US Treasury yields to their highest since 2007.

Spot silver fell 0.4% to $62.98, platinum gained 0.1% to $1,761.12 and palladium fell 0.8% to $1,282.79.



Oil Gains after Early Drop as Geopolitical Risks Support Market

Oil prices are set for a sharp weekly decline amid expectations of a de-escalation in the Iran war following election losses suffered by Trump's party (Reuters).
Oil prices are set for a sharp weekly decline amid expectations of a de-escalation in the Iran war following election losses suffered by Trump's party (Reuters).
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Oil Gains after Early Drop as Geopolitical Risks Support Market

Oil prices are set for a sharp weekly decline amid expectations of a de-escalation in the Iran war following election losses suffered by Trump's party (Reuters).
Oil prices are set for a sharp weekly decline amid expectations of a de-escalation in the Iran war following election losses suffered by Trump's party (Reuters).

Oil prices rose on Thursday after recovering from earlier losses, as persistent geopolitical tensions in the Middle East offset pressure from rising regional crude output.

Brent futures advanced 45 cents, or 0.49%, to $93.21 a barrel by 0732 GMT. US West Texas Intermediate crude climbed 27 cents, or 0.31%, to $86.80, Reuters said.

Both contracts fell more than $1 per barrel in early Asian trading.

"We are ‌currently in ‌a 'no war, no peace' situation which is allowing Middle ‌East ⁠oil production to ⁠recover despite the deadlock in US–Iran negotiations," said Ole Hansen, head of commodity strategy at Saxo Bank.

Middle East production that has returned after recent disruptions is pressuring crude prices, though persistent geopolitical risks are likely to cap further downside, Hansen said.

Iranian security chief Mohsen Rezaei said in televised remarks Iran will not allow even a single particle of enriched nuclear material to ⁠leave the country and there will be consequences if ‌the US launches new strikes.

Washington has ‌said nuclear issues must be part of any initial negotiations with Iran aimed at ‌ending the eight-month-old war, while US officials downplayed the need for further ‌military strikes.

The comments from Iran and US officials highlighted the obstacles to a broader agreement that could ease tensions around the Strait of Hormuz, a key route for global oil shipments.

In the waterway, tankers are still ablaze, oil ‌spills are washing ashore, and drones and missiles have hit infrastructure across the region.

Elsewhere, Russian and Ukrainian negotiators ⁠agreed to a major ⁠prisoner exchange after two days of peace talks in Abu Dhabi that ended on Wednesday, although US mediators said differences remained on other major issues, including territory.

Ukrainian President Volodymyr Zelenskiy said Kyiv hoped to achieve concrete results on resolving the war this year.

US crude stocks rose by 9 million barrels in the latest week, market sources said, citing data from the American Petroleum Institute. Official data from the US Energy Information Administration is due on Thursday, delayed a day because of a US national holiday on Wednesday.


Saudi Arabia Steps Up Shipping Measures to Keep Supply Chains Moving

Air cargo being prepared aboard a Saudia aircraft (SPA). 
Air cargo being prepared aboard a Saudia aircraft (SPA). 
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Saudi Arabia Steps Up Shipping Measures to Keep Supply Chains Moving

Air cargo being prepared aboard a Saudia aircraft (SPA). 
Air cargo being prepared aboard a Saudia aircraft (SPA). 

Saudi Arabia has stepped up exceptional measures to keep goods moving amid regional shipping disruptions, establishing a technical team to ease cargo procedures and dedicated support centers for the aviation and ports sectors.

The measures aim to speed up responses to businesses, improve the operational readiness of logistics facilities, and ensure the continued flow of goods through airports and seaports.

The Ministry of Transport and Logistic Services has informed private sector companies that the team will include representatives of the transport and logistics sector and the Zakat, Tax and Customs Authority (ZATCA).

It will address technical and operational obstacles, facilitate procedures for all types of shipments from affected airports, particularly King Khalid International Airport in Riyadh, and assist public and private sector operators.

Logistics Support

The General Authority of Civil Aviation (GACA) has launched an air cargo support and knowledge center, while the Saudi Ports Authority (Mawani) has established a similar facility to receive logistics support requests and follow up with relevant authorities.

The ministry urged businesses to report shipping difficulties through designated communication channels so the technical team could examine possible solutions and provide assistance.

Since the outbreak of the US-Iran war earlier this year, Saudi Arabia has introduced operational and regulatory measures to strengthen supply chain resilience and limit the impact of disruptions to regional shipping and trade.

Alternative Shipping Routes

The measures include redirecting some cargo from eastern ports to western facilities, particularly Jeddah Islamic Port, and improving connections between seaports, land border crossings and railway networks.

Authorities have also expanded shipping services in cooperation with the private sector and strengthened road freight operations, drawing on the Kingdom’s fleet of more than 500,000 trucks.

Combined land, air and sea transport solutions are being used to help shipments reach their destinations efficiently.

The initiatives are intended to diversify transport routes, improve operational readiness and strengthen cooperation with businesses to maintain trade flows and the efficiency of Saudi Arabia’s logistics network amid regional disruptions.


Saudi Arabia Leads OPEC+ Production Recovery Toward Pre-War Levels

Aramco storage tanks and pipelines (Aramco) 
Aramco storage tanks and pipelines (Aramco) 
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Saudi Arabia Leads OPEC+ Production Recovery Toward Pre-War Levels

Aramco storage tanks and pipelines (Aramco) 
Aramco storage tanks and pipelines (Aramco) 

OPEC+ crude oil output rebounded in October to nearly its pre-Iran war level, driven by a sharp increase in Saudi production despite continued disruptions to oil shipments through the Strait of Hormuz.

Saudi Arabia reported its highest output since the war began, helping lift the alliance’s combined production to 41.23 million barrels per day (bpd), according to OPEC’s monthly report released Wednesday.

That represented an increase of approximately 2.04 million bpd from September and brought production to about 97% of the 42.72 million bpd recorded in February, according to Reuters calculations based on OPEC data.

The rebound highlights the ability of Saudi Arabia and other Gulf producers to restore supplies despite the war’s continuing impact and restrictions on tanker movements through the strategic waterway.

Some producers have worked around the disruptions through alternative shipping arrangements, including ship-to-ship oil transfers, and pipelines that allow crude exports to bypass the strait.

Saudi Arabia Drives Production Increase

Saudi Arabia informed OPEC that its crude output rose to 10.563 million bpd in October, up from approximately 8.372 million bpd in September, an increase of nearly 26%.

That marked its highest level since February, when production reached 10.882 million bpd.

The Kingdom had raised output in February, ahead of US and Israeli strikes on Iran, reflecting its readiness to bolster supplies amid expectations of escalating market disruptions.

The latest figures show that Riyadh substantially increased production in October despite persistent risks to regional oil exports.

Iraq also reported higher output, reaching approximately 4.9 million bpd, its highest level since the conflict began.

However, secondary sources cited by OPEC estimated Iraqi production at 4.491 million bpd, placing it close to its assigned production target.

Russian, Kazakh and Nigerian Output Rises

Russian oil production increased by approximately 41,000 bpd in October from September to 8.668 million bpd, according to secondary-source data in OPEC’s report.

The increase followed months of declining output amid Ukrainian attacks on Russian energy infrastructure, including oil refineries.

US President Donald Trump announced an energy-sector ceasefire between Russia and Ukraine last month, but the agreement failed to hold in any meaningful way.

Nevertheless, a temporary reduction in attacks on Russian refining facilities may have helped support production.

Kazakhstan’s output also increased, rising by approximately 34,000 bpd month on month to 1.887 million bpd.

In Nigeria, crude oil production averaged 1.69 million bpd in October, according to the country’s petroleum regulator, marking the sixth consecutive month in which Nigeria met its OPEC production quota.

Excluding condensates, output stood at approximately 1.51 million bpd, slightly above its quota of 1.5 million bpd.

The regulator attributed the improvement to greater operational efficiency, more consistent production and better transportation of crude from oilfields to export terminals.

OPEC Maintains Demand Forecasts

OPEC left its forecasts for global oil demand growth in 2026 and 2027 unchanged, after lowering its demand-growth estimates for six consecutive months.

The organization expects global demand to increase by approximately 180,000 bpd in 2026 and by 2.55 million bpd in 2027, bringing average worldwide consumption to 108.3 million bpd.

The projections come as October’s production figures point to a recovery in Gulf supplies after months of disruptions that forced several producers to reduce output or suspend some exports.

The rebound is particularly significant as OPEC+ prepares to complete a review of its members’ maximum production capacities in the coming days.

The findings will help determine production targets for 2027.

The alliance is scheduled to meet online on November 29 to discuss next year’s output targets, with members facing markedly different circumstances.

While some countries have restored much of their production capacity, others continue to contend with operational constraints and export-related challenges.