Oil and gold prices rose on Wednesday, in a context marked by uncertainties surrounding the negotiations between the United States and Iran and by the repercussions of the midterm U.S. elections on financial markets. Brent crude surpassed $104 per barrel, while gold gained more than 2%, returning above $4,000 per ounce.
The Essentials
- Oil : Brent is still down about 8% since the start of the week.
- Negotiations : the United States and Iran are examining new mediation proposals.
- Gold : the precious metal benefits from the dollar’s weakness and the decline in U.S. Treasury yields.
- Dollar : the U.S. currency has reached its lowest level in four weeks.
- Fed : markets are pricing in a 79% probability of a rate hike in December, according to cited FedWatch data.
Oil: Brent rebounds despite an 8% drop for the week
After a sharp decline at the start of the week, Brent surpassed the $104 per barrel threshold, as uncertainties persisted regarding the outcome of the peace negotiations between Washington and Tehran.
According to the spokesman for the Qatari Ministry of Foreign Affairs, the two countries are examining new proposals presented by mediators to bring their positions closer. However, the Iranian national security official said, in a post on social media, that the American response remained unsatisfactory.
Meanwhile, the United States carried out, earlier this week, defensive strikes against Iranian surface-to-air missile systems used against American forces. The limited scope of these operations, however, does not suggest an imminent resumption of large-scale military actions.
Despite its rebound, Brent is still down about 8% since the start of the week, in a context of optimism regarding possible diplomatic progress and signs of a revival of crude oil exports from the Middle East.
Gold: the dollar’s decline and falling yields support prices
In the precious metals market, gold rose by more than 2% on Wednesday, reclaiming above $4,000 per ounce, helped by the weaker U.S. dollar and the decline in Treasury yields.
This development comes after the Democrats’ significant victories in the U.S. midterm elections. Markets interpreted these results as potentially increasing the risk of political gridlock in Washington and limiting prospects for a renewed fiscal expansion.
The dollar thus fell to its lowest level in four weeks, while U.S. Treasury yields fell across maturities, boosting the appeal of gold, an asset that does not generate income.
Persistent uncertainties surrounding talks between Washington and Tehran also weigh on geopolitical prospects, with the two countries remaining far from an agreement to end their conflict.
Investors are now awaiting Friday’s release of the U.S. Nonfarm Payrolls report (Nonfarm Payrolls), which could provide new indications about the Federal Reserve’s monetary policy outlook.
According to the CME Group’s FedWatch tool, markets currently price in a 79% probability of a Fed funds rate hike in December.
