Oil prices hover at two-year highs, Brent approaches $89
Oil prices rose on Tuesday amid mounting geopolitical tensions in the Middle East, while Ukraine intensified its attacks on Russian energy infrastructure.
A guided Ukrainian plane executed airstrikes against Russia’s third largest oil refinery, following a similar series of attacks in March, which curtailed Moscow’s refinery capacity by 14%.
Tomorrow, OPEC+ members will convene to discuss market developments, with analysts expecting no change in production policies.
The Energy Information Administration in the US will also announce official crude inventory data tomorrow, expected to show a decline of 300 thousand barrels.
On trading, Brent June futures rallied 1.7%, or $1.5 to $88.92 a barrel, the highest since June 2022.
US crude futures due in May rose 1.7%, or $1.44 to $85.15 a barrel, the highest since June 2022.
Gold surges 1.5%, marking fourth successive record high
Gold prices rose on Tuesday as the dollar lost ground against most major rivals, while US treasury yields advanced.
US 10-year treasury yields rose by 6.2 basis points to 4.39%, while two-year yields stabilized at 4.722%.
Fed Chair Jerome Powell said in a San Francisco conference that policymakers shouldn’t rush into interest rate cuts, especially as the US economic performance proves resilient, while inflation remains above 2%.
Earlier US data showed available job openings rose to 8.8 million jobs in February, above 8.7 million jobs in January.
Otherwise, the dollar index fell 0.2% as of 15:41 GMT to 104.8, with a session-high at 105.1, and a low at 104.6.
On trading, gold spot prices rose 1.6% as of 18:26 GMT, or $34.6 to $2291.90 an ounce.
Wall Street declines by over 1% as US yields surge
US stock indices declined on Tuesday as US treasury yields climbed, as the odds of a Fed interest rate cut in June gained steam on the back of strong US manufacturing and inflation data.
US 10-year treasury yields rose by 6.2 basis points to 4.39%, while two-year yields stabilized at 4.722%.
Fed Chair Jerome Powell said in a San Francisco conference that policymakers shouldn’t rush into interest rate cuts, especially as the US economic performance proves resilient, while inflation remains above 2%.
On trading, Dow Jones fell 1.2%, or 480 points as of 16:14 GMT to 39,086, while S&P 500 fell 1%, or 53 points to 5190, while NASDAQ slipped 1.4%, or 222 points to 16,174.
Gold gives up record highs on profit-taking
Gold Price Movement
Gold prices fell in European trade on Tuesday for the first time in six days off record highs on active profit-taking.
Factors Affecting Prices
Prices are pressured by the dollar’s spike in recent days, in addition to gains by US treasury yields following strong US inflation data, which reduced the odds of a Fed interest rate cut in June.
Prices
- Gold prices fell 0.25% today to $2246 an ounce, with a session-high at $2259.
- Gold prices rose 0.8% on Monday, the fifth profit in a row, marking a fresh record high at $2265 an ounce on strong haven demand.
The Dollar's Impact
The dollar index rose 0.15% on Tuesday on track for the fifth profit in a row, hitting a five-month high at 105.10 against a basket of major rivals. A stronger dollar makes greenback-denominated gold futures costlier to holders of other currencies.
US Treasury Yields
US 10-year treasury yields rallied by 0.4% to a two-week high at 4.337%, underpinning the dollar further.
US Data Insights
The US manufacturing PMI tipped into growth in March at 50.3, the best reading since October 2022, and passing estimates of 48.5. The gains reflect increasing orders and improving growth inside the US during the first quarter of the year.
US Interest Rates
Following the data, the odds of a US interest rate cut at the June Federal Reserve meeting fell from 70% to 63%. Traders are still pricing in 75 basis points of expected US interest rate cuts this year.
Gold Performance Projections
JPMorgan's analysts foresee gold prices hitting $2500 an ounce this year. Goldman Sachs' analysts project a minimum price target of $2300 an ounce for this year, anticipating policy easing by the Federal Reserve.
The SPDR
Gold holdings at the SPDR Gold Trust fell 3.17 tonnes yesterday to a total of 826.98 tonnes, the lowest since March 13.
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