Gold Prices Drop as Crude Oil Tops $80 Amid Energy Surge
Gold prices drop while crude oil surged above $80 a barrel. Global energy demand outpaces supply as travel outlook improves.
*Sage FX would like to state that traders should research extensively before following any information given hereby. Any assumptions made in this article are provided solely for entertainment purposes and not for traders to guide or alter their positions. Please read our Terms & Conditions and Risk Disclosure for more information.
- Gold prices slipped below $1,750 as a rise in global energy markets lifted oil above $80 a barrel
- Crude oil’s six-day surge hit the highest price level since 2018
Gold Prices Fall Near $1,735, Oil Surges for a Sixth Day
The price of gold fell below $1,750 per troy ounce early on Tuesday, reaching a session low of $1,735. The precious metal has been pushed aside from the spotlight recently as investors have turned to riskier assets such as stocks and energy products. Gold’s early-morning slide pressured the metal to a five-week low.
Brent oil, on the other hand, topped $80 a barrel on Tuesday, reaching a high last seen in October 2018. Economists point to the heightened demand for oil, which is running ahead of the market supply. As a result, the price of oil and energy products has surged in recent weeks.
Brent oil, the international benchmark, has been rallying for the past six straight days. Over that period, the asset has advanced about 7% to the current market price of roughly $70.50.
Oil Industry Projected to Thrive
The latest boost in the prices of energy products came after major banks and oil producers predicted next year would see even greater consumption than the pre-pandemic era. Due to the economic reopening and the return of travel, analysts argue, prices of oil are expected to continue rising in 2022.
Oil has had a spectacular run since the pandemic hit the financial markets in March 2020. Over the past 17 months, brent oil has gained over 400%, from about $15 in late April 2020, to today’s session high of $80.
On the back of surging prices in energy products such as oil and gas, the energy industry has been struggling to meet the demand. In turn, this has led to a robust and swift increase in energy prices.
US Futures and European Bourses Slide Today
The broader financial markets today are looking gloomy with US index futures pointing lower. Contracts futures tied to the Dow Jones Industrial Average were lower by about 120 points. S&P500 futures dropped about 0.6%, while Nasdaq futures slipped about 1.1%.
Bitcoin slipped earlier today to a session low of $41,500 per coin. The leading cryptocurrency is currently trading near $43,800, down about 2% on the day. European markets have switched to a risk-averse approach on Tuesday with the Europe-wide Stoxx 600 index lower by about 1.2% in today’s session.
Jerome Powell to Speak Before Senate
While gold has been in decline, and oil prices have rallied, investors have increased their concerns that inflation could be here to stay. To try and convince the markets that inflation is transitory, Federal Reserve Chairman Jerome Powell will appear in a hearing before the US Senate today.
Mr. Powell will be joined by the Treasury Secretary Janet Yellen. She will also be discussing the health of the US economy, the pace of labor-market recovery, and the steep rise in consumer prices.