Gold price increased more than 100 USD, oil dropped sharply

At 7:30 p.m. (Vietnam time), the world spot gold price increased by 112 USD to 4,673 USD. Earlier in the session, the price at one point increased more than 150 USD to surpass the 4,700 USD mark.

On the contrary, crude oil prices fell sharply. Tonight, Brent and WTI prices at times decreased by 10-11%, bringing WTI to nearly 90 USD a barrel. Currently, the reduction has narrowed to 8%. Each barrel of Brent costs 101 USD, while WTI is 94 USD.

The market fluctuated after US media reported that the country was close to an agreement with Iran through a memorandum of understanding to end hostilities and establish a nuclear negotiation framework.

News page Axios Citing a US official source, “The White House believes they are close to reaching a consensus with Iran” on the one-page, 14-point Memorandum of Understanding (MOU), drafted by Middle East special envoy Steve Witkoff and Trump’s son-in-law – Jared Kushner, along with a number of Iranian officials. A Pakistani official participating in the peace effort also confirmed Reuters information above. “We are very close, very close,” he said.

“A timely peace agreement will allow the normalization of transportation activities across the Strait of Hormuz, thereby reducing inflationary pressure, creating conditions for the US Federal Reserve (Fed) to reduce interest rates this year,” said Ricardo Evangelista – analyst at ActivTrades. He believes that if this scenario occurs, gold prices could regain momentum, returning to above 5,000 USD and even towards 5,500 USD by the end of this year.

The Strait of Hormuz blockade disrupted 20% of global crude oil and liquefied gas (LNG) supplies. This caused Brent oil prices to increase by nearly 60% in the past 2 months, increasing inflationary pressure.

World gold prices were therefore under pressure throughout the war, as accelerating inflation made central banks hesitant to reduce interest rates. Although it is a risk prevention tool during periods of inflation and economic-political fluctuations, precious metals are at a disadvantage in a high interest rate environment, due to not paying fixed interest.