Oil prices fell on Tuesday ahead of an expected OPEC+ output increase and with Iraqi Kurdistan resuming crude exports via Turkey, fueling market expectations of oversupply.

Brent crude futures for November delivery, expiring Tuesday, dropped 53 cents, or 0.8%, to $67.44 a barrel by 10:26 GMT. US West Texas Intermediate (WTI) crude fell 62 cents, or 1%, to $62.83.

This extends Monday’s slide, when both Brent and WTI sank more than 3%—their steepest one-day fall since August 1.

Tamas Varga of PVM said selling pressure intensified after OPEC+ sources hinted at another production hike, following the bearish impact of Kurdish crude exports resuming via Turkey.

OPEC and allies including Russia meet Sunday, with three sources saying a supply boost of at least 137,000 barrels per day for November is likely.

Ed Moya of Marex added: “Although OPEC+ is still underproducing its quota, the market doesn’t seem eager to absorb more oil.”

Iraq’s oil ministry confirmed flows restarted Saturday through a pipeline from the semi-autonomous Kurdistan region to Turkey—ending a 2.5-year freeze—under a provisional deal. Shipments are expected to gradually reach up to 230,000 barrels a day.

Markets have stayed cautious in recent weeks, balancing supply risks from Ukrainian drone strikes on Russian refineries against the prospect of rising output and weak demand.

Separately, US President Donald Trump won support from Israeli Prime Minister Benjamin Netanyahu for a US peace plan in Gaza, though Hamas’s stance remains unclear.

Varga noted that restoring normal shipping through the Suez Canal after a Gaza peace deal would strip out much of the geopolitical risk premium.

ANZ analysts also said in a Tuesday note that the threat of a US government shutdown has added to demand concerns, reinforcing selling pressure.

The US dollar steadied on Tuesday ahead of a potential government shutdown that could disrupt the release of this week’s monthly jobs report, while the Australian dollar strengthened after the central bank adopted a cautious stance on inflation.

Investors are focused on the looming shutdown, with federal funding set to expire at midnight Tuesday (04:00 GMT) unless Republicans and Democrats reach a last-minute spending deal.

The US Labor and Commerce Departments said their statistical agencies would halt the release of economic data in the event of a partial shutdown, including September’s closely watched jobs report. The jobs report is a key input for Federal Reserve policymakers, and any delay could leave the central bank “flying blind” on labor market conditions.

Currently, traders are pricing in 42 basis points of rate cuts by December and a total of 104 basis points by the end of 2026, about 25 basis points fewer than mid-September levels.

Elias Haddad, senior markets strategist at Brown Brothers Harriman, noted: “If the shutdown is short, the Fed will largely ignore it. But a prolonged closure (more than two weeks) adds downside risks to growth and raises the odds of looser monetary policy.”

Lee Hardman, currency strategist at MUFG, said the dollar is under pressure due to rising political uncertainty in the US. The dollar index, already down about 10% year-to-date, slipped 0.1% on the day to 97.785.

Losses were most pronounced against traditional safe-haven, low-yield currencies like the yen and Swiss franc.

The yen rebounded from overnight weakness, pushing the dollar down 0.4% to 148.02 yen. Investors digested the Bank of Japan’s September meeting summary, which showed discussion of a near-term rate hike. Markets now assign a 60% probability of a December move. Analysts at ING suggested shorting USD/JPY could become a popular trade if a US shutdown materializes, noting the pair lost 1.5% during the 2018–2019 closure.

The Swiss franc also firmed, sending the dollar 0.2% lower to 0.796 franc, while the greenback held steady against the euro at 0.9347 and against the pound.

The Australian dollar rose 0.4% to $0.6604 after the Reserve Bank of Australia left interest rates unchanged, as expected, following three cuts this year. The RBA said recent data suggest Q3 inflation may exceed forecasts, while the economic outlook remains uncertain.

In Europe, the pound shrugged off data showing UK GDP grew 0.3% between April and June, while the current account deficit widened sharply to £28.939 billion ($38.8 billion), equal to 3.8% of GDP versus 2.8% in Q1. Sterling last traded up 0.1% at $1.3448, while slipping slightly against the euro, which rose 0.1% to 87.34 pence. The euro also gained against the dollar to $1.1742.

The current rally is supported by the continued decline of the US dollar against a basket of global currencies, pressured by concerns over a potential US government shutdown and expectations that the Federal Reserve will cut interest rates twice before the end of this year.

To reassess those expectations, markets are awaiting a series of highly important US labor market reports this week, which the Fed relies heavily on in shaping its monetary policy.

Price Overview

• Gold prices today: Spot gold rose 1.0% to $3,871.78 per ounce, the highest level ever, from an opening price of $3,833.30, with a session low of $3,825.36.

• At Monday’s settlement, gold gained 1.95% in its third straight daily increase, driven by fears of a US government shutdown.

Monthly Performance

During September trading, which officially ends at today’s settlement, gold prices are up about 12.3%, on track for a second consecutive monthly gain and the biggest monthly rise since August 2011.

US Dollar

The dollar index fell 0.25% on Tuesday, extending losses for a third session in a row to its lowest level in a week, reflecting continued weakness in the US currency against its global peers.

Dollar weakness stems from concerns over a looming government shutdown, along with strong expectations that the Fed will deliver interest rate cuts in October and December.

US Interest Rates

• In its September meeting, the Fed delivered its first rate cut since December 2024, lowering rates by 25 basis points, and signaled openness to further easing.

• The Fed’s median projections point to an additional 50 basis points of cuts in 2025.

• Officials also anticipate one 25 basis point cut in 2026, with a similar move in 2027.

• According to the CME FedWatch Tool, markets currently price a 90% probability of a 25 basis point cut in October, with a 10% chance of rates staying unchanged.

• To recalibrate those October expectations, markets await several key US labor reports this week: job openings (Tuesday), private payrolls (Wednesday), weekly jobless claims (Thursday), and the September nonfarm payrolls report (Friday).

Gold Outlook

Tim Waterer, Chief Market Analyst at KCM Trade, said: “The looming US government shutdown is adding uncertainty to markets, accelerating gold’s gains.”

He added: “The $4,000 level now looks like a realistic year-end target for gold, with market dynamics such as lower interest rates and ongoing geopolitical tensions continuing to support the precious metal.”

SPDR Gold Trust

Holdings in SPDR Gold Trust, the world’s largest gold-backed ETF, rose by 6.01 metric tons on Monday, marking a second consecutive daily increase, lifting the total to 1,011.73 metric tons – the highest since July 15, 2022.

The euro rose in European trading on Tuesday against a basket of major currencies, extending gains for the third consecutive session against the US dollar, as the recovery from recent lows continued, supported by ongoing weakness in the greenback in the foreign exchange market.

The single currency is on track to achieve a second consecutive monthly gain, bolstered by the European Central Bank’s hawkish stance, after its recent meeting signaled no need for further monetary easing, which in turn reduced the likelihood of additional rate cuts in Europe before the end of the year.

Price Overview

• Today’s EUR/USD exchange rate: The euro gained about 0.2% to $1.1748, up from the session’s opening at $1.1726, with a low at $1.1712.

• On Monday, the euro closed 0.25% higher against the dollar, marking a second straight daily advance, rebounding from a three-week low of $1.1646.

US Dollar

The US dollar index fell by about 0.2% on Tuesday, extending losses for a third consecutive session and hitting a one-week low, reflecting persistent weakness in the greenback against a basket of currencies.

Dollar levels remain under pressure due to mounting concerns over a potential US government shutdown, as well as strong expectations that the Federal Reserve will cut interest rates in October and December.

Markets this week await a series of key US labor market reports, alongside remarks from Federal Reserve officials, to reassess these policy expectations.

Monthly Performance

In September trading, which officially concludes with today’s settlement, the euro is up more than 0.5% against the dollar, putting the currency on track for a second straight monthly gain.

European Interest Rates

• As expected, the European Central Bank kept its main interest rates unchanged this month at 2.15%, the lowest since October 2022, marking a second consecutive hold.

• In its policy statement, the ECB said inflation is currently approaching the 2% medium-term target and that the board’s assessment of inflation expectations remains broadly unchanged.

• Sources indicated policymakers believe no further cuts are needed to reach the 2% inflation target, despite updated forecasts pointing to lower rates in the coming two years.

• Unless the euro area faces another major economic shock, borrowing costs are expected to remain at current levels for some time.

• Money market pricing for a 25-basis-point rate cut in October dropped from 30% to below 10%.

• Traders have trimmed bets on further monetary easing, signaling an end to the ECB’s rate-cutting cycle this year.

Going forward, investors will closely monitor upcoming European economic data as well as ECB officials’ commentary to reassess the outlook.