US Oil Prices Surge Amid Escalating Tensions, Gold Under Pressure

Oil prices surged to six-week highs on Tuesday as tensions between the US and Iran escalated. Brent crude rose 1.7% to $99.49, while WTI oil gained 2.8% to $94.60.

The increase in energy prices is fueling concerns about renewed inflationary pressure, pushing Treasury yields higher, and raising the chances of a rate hike by the Federal Reserve next week. The yield on the 10-year Treasury note recently reached its highest level since November 2023.

In the US stock market, futures opened lower as investors focused on the ongoing conflict with Iran and renewed trade tensions between the US and Canada. The Dow Jones fell 0.9%, while the S&P 500 slipped 0.3% and the Nasdaq gained 0.2%. Asian markets were mixed, with South Korea's KOSPI and Japan's Nikkei rising, but Hong Kong declined.

The precious metal gold is recovering modestly after two consecutive sessions of losses, supported by a pullback in the dollar and a stronger yen. However, hawkish Fed expectations and geopolitical tensions are limiting its upside, keeping gold below $4,450. The inflation data to be released this week will be crucial in determining expectations for the Fed's rate decision.