Middle East Tensions and Interest Rates Drive Oil, Gold, and Silver Prices to New Heights
The recent surge in oil prices has reached $100 per barrel as tensions in the Middle East continue to escalate. This marks a significant increase from February, when Brent crude was trading near $73 per barrel. The disruption of tanker traffic through the Strait of Hormuz and the subsequent drawdown of global reserves have contributed to the sharp rise in oil prices.
Nagham Hassan, Mena market analyst at eToro, attributes the rise in oil prices to geopolitical developments in the Middle East. According to Hassan, the outlook for oil over the next six months will depend heavily on the direction of the conflict, and further escalation could increase the risk of a genuine supply shortage.
Gold, on the other hand, has been driven primarily by interest rates. The yield on the 10-year US Treasury crossed 5% this week, which has put pressure on gold prices. Gold initially corrected by around 25-30% from its peak in January but has since recovered and is currently trading at approximately $4,310 to $4,350 per ounce.
Silver has been influenced by both interest rates and industrial demand. The metal's rally was stronger than gold's due to increased demand from the solar, electronics, and AI sectors. Despite correcting 47% from its record high, silver remains approximately 55% higher than a year ago, thanks in part to ongoing industrial consumption.