Oil Retreats After Previous Session’s Sharp Rally
Global commodity markets showed a mixed trend on Thursday, September 24, with crude oil prices easing after their strong advance in the previous session while gold struggled to recover from a steep selloff.
Brent crude futures fell 92 cents, or 0.9%, to $102.16 a barrel at 0400 GMT, while US West Texas Intermediate (WTI) crude declined 77 cents, or 0.8%, to $91.39 a barrel.
The pullback followed a volatile Wednesday session in which Brent settled $3.83, or 3.86%, higher at $103.08 a barrel. WTI gained $1.64, or 1.81%, to settle at $92.16.
Despite Thursday’s decline, Brent remained above the psychologically important $100-a-barrel level.
Iran Diplomacy Signals Ease Some Supply Concerns
The latest decline in crude came as investors assessed signals that Iran remains open to diplomacy aimed at ending its war with the United States.
A senior Iranian official told Reuters that Tehran and Washington remain divided over how to bring the conflict to an end, but diplomatic efforts should continue. The comments followed Iranian President Masoud Pezeshkian’s address to the UN General Assembly, where he said Iran would not surrender to US pressure.
The possibility of negotiations has provided some relief to a market that has been highly sensitive to developments in the Middle East and the potential disruption of global energy supplies.
However, the continuing gap between the US and Iran means geopolitical risk has not disappeared. That leaves crude vulnerable to sharp moves as traders respond to diplomatic and military developments.
US Crude Inventories Add Another Factor
Supply data from the United States also entered the equation.
US crude inventories increased by 3 million barrels, according to data from the US Energy Information Administration cited by Reuters.
Rising inventories can signal softer demand or increased supply and may place downward pressure on crude prices. But geopolitical concerns remain an important counterweight, particularly with Brent still trading above $100.
Gold Struggles as Fed Tightening Expectations Rise
While crude prices eased, gold remained under pressure.
Spot gold was down 0.1% at $4,281.98 an ounce as of 0155 GMT, while US gold futures for December delivery were little changed at $4,317.50.
The subdued performance followed a much steeper decline on Wednesday. Spot gold had fallen 1.7% to $4,282.53 an ounce, while December US gold futures settled 1.3% lower at $4,318.40.
The pressure on bullion is notable because geopolitical uncertainty would traditionally be expected to support demand for safe-haven assets. In the current environment, however, monetary-policy expectations are exerting a powerful counterforce.
Why Higher Interest Rates Are Hurting Gold
The Federal Reserve raised its benchmark interest rate by 25 basis points to 3.75%-4.00% last week, and markets remain focused on the possibility of further tightening.
Higher interest rates can make interest-bearing assets more attractive relative to gold, which does not generate a yield.
A stronger US dollar can add further pressure because dollar-denominated gold becomes more expensive for buyers using other currencies.
On Wednesday, the dollar reached a two-month high as hawkish signals from Federal Reserve policymakers strengthened expectations that US rates could rise again.
The combination of higher energy prices, inflation concerns and stronger US economic data has therefore created an unusual challenge for bullion: geopolitical uncertainty is supportive, but the resulting inflation risks may encourage tighter monetary policy, which can weigh on gold.
Silver Also Extends Decline
Other precious metals were also under pressure.
Silver was around 0.2% lower at $64.31 an ounce on Thursday after falling roughly 4% in the previous session, while platinum and palladium also edged lower.
Wednesday had already been a difficult session across the precious-metals complex, with spot silver falling 3.9%, platinum losing 5% and palladium dropping 3.7%.
What Investors Are Watching Next
The commodity outlook now hinges on two competing forces.
For crude oil, investors are closely watching whether diplomatic efforts between Iran and the United States produce meaningful progress and whether Middle East supply risks ease. Any escalation that threatens production or transportation routes could quickly revive upward pressure on oil.
For gold, the focus is increasingly on US interest rates, Treasury yields and the dollar. Clearer indications that the Federal Reserve intends to tighten policy further could continue to pressure bullion, while softer economic data or a reduction in rate-hike expectations could provide support.
For now, Thursday’s trading illustrates the divergence: oil is giving back part of its previous surge, while gold remains constrained by the prospect of higher-for-longer US interest rates.
