Oil prices fell on Friday, heading for a weekly loss of nearly 3%, after the International Energy Agency (IEA) projected an increase in global supply surpluses over the coming years, while US President Donald Trump and Russian President Vladimir Putin agreed to hold a new summit to discuss the war in Ukraine.

Brent crude futures fell by 44 cents, or 0.7%, to 60.62 dollars a barrel, while US West Texas Intermediate (WTI) crude declined by a similar amount to 57.02 dollars a barrel, down 0.8%.

The decline came after Trump and Putin agreed on Thursday to hold a new summit in Budapest within the next two weeks, a surprise development that coincided with Ukrainian President Volodymyr Zelensky’s visit to the White House on Friday to request additional military support — including long-range US Tomahawk missiles — as Washington presses India and China to halt imports of Russian oil.

Tamas Varga, analyst at PVM, said the diplomatic move may signal a possible softening of the US stance toward Russia. “If that happens, it would likely lead to lower oil prices,” he added.

Varga explained that previous drone attacks by Ukraine on Russian refineries and threats of secondary sanctions on buyers of Russian oil, such as India and China, had supported prices, “but that could now change.”

Weekly losses were also driven by escalating trade tensions between the United States and China, which have heightened fears of a global economic slowdown and weaker energy demand.

“These developments completely undermine confidence,” said Jorge Montepeque, managing director at Onyx Capital Group. “I expect the US economy to feel the impact of these pressures very quickly.”

Further pressure came after the IEA’s latest report projected a growing oil supply surplus by 2026.

In the United States, data from the Energy Information Administration (EIA) on Thursday showed that crude inventories rose by 3.5 million barrels to 423.8 million barrels last week, compared with analysts’ expectations for an increase of just 288,000 barrels, according to a Reuters survey.

The larger-than-expected inventory build was attributed to lower refinery utilization as plants enter the fall maintenance season. The data also showed US crude production rising to a record 13.636 million barrels per day.

In the previous session, Brent crude closed down 1.37%, while WTI fell 1.39%, both hitting their lowest levels since May 5.

The US dollar was on track Friday to record its worst weekly performance since July, as escalating trade tensions between the United States and China, along with signs of weakness among US regional banks, drove investors toward safe-haven assets such as the Swiss franc and the Japanese yen.

Further signs of softness in the US economy have emerged, while the ongoing federal government shutdown has delayed the release of key economic data, leaving investors less certain about the true state of economic conditions.

The Swiss franc reached its strongest level in a month, while the yen also strengthened, partly supported by comments from Bank of Japan Governor Kazuo Ueda, who suggested that an interest rate hike could take place this month.

Dylan Wu, research analyst at Pepperstone, said that rising concerns over the trade war, the Federal Reserve’s independence, and the government shutdown are making the dollar vulnerable to what is known as the “debasement trade,” where investors turn to assets whose value cannot easily be devalued, such as gold and cryptocurrencies.

“It’s really hard to find a bullish scenario for the dollar index,” Wu added. “Rather than betting on a single currency, investors are shifting toward gold, digital assets, and other hedges against risk.”

The Swiss franc was among the best performers against the dollar, which fell 0.4% to 0.7898. The dollar index — which measures the greenback’s performance against six major currencies — was heading for a weekly decline of 0.7%, its biggest since late July.

The dollar also fell 0.39% against the yen to 149.825, slipping below the 150 mark for the first time since October 6.

Bank of Japan Governor Ueda said during a visit to Washington on Thursday that the central bank is ready to raise its key interest rate if the likelihood of achieving its growth and inflation forecasts increases.

The yen’s rise came despite its defensive position since the election of Sanae Takaichi — known for her dovish economic stance — as leader of the ruling Liberal Democratic Party earlier this month. However, a parliamentary vote to confirm her as prime minister was postponed due to disagreements within the ruling coalition.

Reuters reported Friday that Japan’s House of Representatives Steering Committee approved holding the prime ministerial vote on October 21.

Fiona Cincotta, senior analyst at City Index, said, “Rising concerns over the US-China trade war and anxiety around regional US banks are reminding markets that things may not be as rosy as investors once thought.”

“There is clearly a shift toward safe-haven assets,” she added. “In equities, S&P 500 futures are down 1.4%, gold is trading near record highs, and the Swiss franc is performing strongly — all signs of a broader move toward risk aversion.”

In other currency markets, the euro rose 0.1% to 1.1698 dollars, while the British pound slipped 0.2% to 1.341 dollars.

On the monetary policy front, Federal Reserve Governor Christopher Waller said he supports another rate cut at the upcoming Fed meeting, citing mixed readings on the labor market.

Meanwhile, Stephen Miran — the newest member of the Federal Reserve Board of Governors and an economic adviser to President Donald Trump — renewed his call for a more aggressive series of rate cuts in upcoming meetings than some of his colleagues prefer.

Miran’s temporary term is set to expire at the end of January, while Fed Governor Lisa Cook continues in her role as the courts consider legal challenges to Trump’s attempt to remove her.

The Federal Reserve’s Beige Book offered limited support for maintaining current interest rates, noting emerging signs of economic weakness, including an uptick in layoffs and reduced spending among middle- and lower-income households.

Gold prices rose in European trading on Friday, extending gains for the sixth consecutive session and continuing to set new record highs as they came close to trading above the 4,400-dollar-per-ounce mark for the first time in history, poised to post their biggest weekly gain in five years.

The rally came amid strong safe-haven demand and support from a weaker US dollar against a basket of global currencies, as markets priced in a high probability of Federal Reserve rate cuts in October and December.

Price Overview

• Gold prices rose 1.2% to 4,379.65 dollars per ounce — the highest level ever — from an opening of 4,328.19 dollars, after touching a low of 4,278.95 dollars.

• At Thursday’s settlement, gold gained 2.85%, marking its fifth consecutive daily increase and setting a new record above 4,300 dollars per ounce amid continued safe-haven buying.

Weekly Performance

Throughout the week, which officially concludes at today’s close, gold prices have risen about 8.5%, on track for a ninth straight weekly gain — the longest winning streak since June 2020 — and the biggest weekly advance since March 2020.

US Dollar

The US Dollar Index fell 0.3% on Friday, extending losses for the fourth consecutive session to a two-week low of 98.03 points, reflecting broad weakness in the greenback against major and minor currencies.

As is well known, a weaker dollar makes dollar-priced gold more attractive to buyers holding other currencies.

The decline came as the dollar was weighed down by recent dovish comments from Federal Reserve officials and renewed trade tensions between the United States and China.

US officials on Wednesday criticized China’s expanding export controls on rare-earth metals, calling them a threat to global supply chains.

A Treasury Department official said the ongoing two-week US government shutdown could cost the economy up to 15 billion dollars per week in lost output.

US Interest Rates

• Jerome Powell said on Tuesday that the labor market remains stagnant, with low levels of hiring and layoffs, and that the absence of official data due to the government shutdown has not prevented policymakers from assessing the economic outlook — at least for now.

• Philadelphia Fed President Anna Paulson stated that growing risks in the labor market strengthen the case for additional rate cuts.

• Fed Governor Christopher Waller said he supports another rate cut at the upcoming meeting, citing mixed readings from labor-market data.

• According to CME Group’s FedWatch Tool, markets currently price in a 99% probability of a 25-basis-point rate cut at the October meeting, while the probability of no change stands at 1%.

• Investors continue to monitor Fed officials’ comments closely, as key economic data releases remain delayed due to the government shutdown.

Gold Outlook

Tim Waterer, chief market analyst at KCM Trade, said gold could reach a target of 4,500 dollars per ounce “perhaps sooner than expected,” though much depends on how long concerns over US-China trade tensions and the government shutdown persist.

Waterer added that mounting credit-risk concerns among US regional banks have given traders additional reasons to buy gold.

Analysts at Bank of America and Société Générale now expect gold to reach 5,000 dollars per ounce in 2026.

SPDR Fund

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 12.02 metric tons on Thursday, marking the fifth consecutive daily increase and bringing total holdings to 1,034.62 metric tons — the highest level since July 1, 2022.

The euro rose in European trading on Friday against a basket of global currencies, extending its gains for the fourth consecutive session against the US dollar and reaching its highest level in nearly two weeks. It was also on track for its biggest weekly gain in three months, supported by positive political developments in France, the eurozone’s second-largest economy.

Newly appointed French Prime Minister Sébastien Lecornu suspended the 2023 pension reform until after the presidential elections scheduled for 2027, in a move aimed at easing political and social tensions in the country.

Price Overview

• The EUR/USD exchange rate rose by 0.2% to 1.1712 dollars — its highest since October 7 — from an opening level of 1.1687 dollars, after touching a low of 1.1681 dollars.

• The euro ended Thursday’s session up by 0.35% against the dollar, marking its third consecutive daily gain, supported by easing political uncertainty in France and continued weakness in the US currency.

Weekly Performance

Over the course of this week, which concludes with today’s market close, the euro is up about 0.8% against the US dollar — on track for its second weekly gain in the past three weeks and its largest weekly advance since July.

Political Developments in France

French Prime Minister Sébastien Lecornu announced the suspension of the 2023 pension reform until after the 2027 presidential elections, aiming to reduce political and social tensions and responding to strong pressure from left-wing lawmakers who warned that pushing ahead with the reform could threaten the political stability of the new government.

This move allowed Lecornu to survive two no-confidence votes in the French parliament this week, granting his government a temporary reprieve and an opportunity to present a new budget for the eurozone’s second-largest economy.

Analysts view these developments as a shift toward less austere fiscal policies compared to the previous administration, reflecting Lecornu’s intent to calm public sentiment and strengthen confidence in his nascent government.

At the same time, French bonds delivered strong performance, becoming the best among their eurozone peers, according to economist Marc Chandler, who noted that markets view the easing of austerity measures and enhanced political stability in Paris positively.

European Interest Rates

• Market pricing currently shows less than a 10% probability of a 25-basis-point rate cut by the European Central Bank in October.

• Traders have scaled back expectations for further monetary easing by the ECB, suggesting that the current rate-cutting cycle may have ended for this year.

• Investors are awaiting a series of upcoming economic data releases in Europe, along with remarks from ECB officials, to reassess the outlook for interest rate policy.