Oil Price Surge Puts Pressure on Gold Rate Strategies Amid Supply Disruptions

Oil prices surged 6% last week, reaching $88.52 per barrel, as tanker movements through Hormuz remained limited due to geopolitical tensions. This increase has put pressure on gold and other metals rate strategies, which typically react to rising oil prices by declining in value. However, the U.S. interest rate hike expectations have lessened, causing gold to climb approximately 0.9% over the past week.

The supply of exchange-traded metal remains limited and concentrated, with London Metal Exchange aluminium stocks dropping to levels last seen in 1990, nearly halving from 2026. Copper prices on the LME have also risen due to a ban on concentrate exports in Congo. Meanwhile, OPEC lowered its demand-growth estimate for 2026 for the fourth consecutive time, down to 580,000 barrels per day.

Analysts are divided on oil's future direction, with SEB predicting prolonged disruptions will keep prices elevated and Norbert Rucker at Julius Baer noting storage levels are stronger than anticipated, which could drive prices down. Commerzbank believes gold has further to rise if the Federal Reserve maintains its pause.

The primary concern remains the oil flow via the Strait of Hormuz, with Brent crude climbing 6.0% last week and a ceasefire potentially removing the premium swiftly but additional tanker attacks driving up fuel prices and inflation simultaneously.