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Oil & Precious Metals Rally amid Escalating Tensions in Middle East

January 6, 2020 at 14:18 by Vladimir Vyun

While crude oil and gold often move in opposite directions, that was not the case today. Both crude and precious metals logged decent gains due to escalating tensions in the Middle East. On Friday, the US military killed Iranian general Qassem Soleimani. In response, Iran threatened to retaliate and said that it will no longer abide by the terms of the nuclear deal reached in 2015 that put limitations on the Iranian nuclear program, including uranium enrichment, in exchange for lifting sanctions against the Middle Eastern countries by Western powers. The United States have already withdrawn from the deal back in 2018. US President Donald Trump tweeted, reacting to the Iranian threats:

Meanwhile, the Iraqi parliament voted to expel US troops from the country.

The situation was beneficial both to the energy market as well as the precious metals market. Gold and other precious metals profited from risk aversion sparked by the news, which drove investors to safe-haven assets. At the same time, oil found demand due to fear of supply disruption.

Futures for delivery of WTI crude oil in February climbed by $0.58 (0.92%) to $63.63 per barrel as of 13:18 GMT on NYMEX today. Futures for delivery of Brent crude rallied by $0.79 (1.15%) to $63.69 on ICE. Gold for delivery in February jumped by $27.2 (1.75%) to $1,579.6 per troy ounce on COMEX. March silver surged by $0.32 (1.78%) to $18.48 per ounce. Spot price for platinum rose by $3.42 (0.35%) to $958.42 per ounce, and palladium advanced by $29.96 (1.51%) to $2,019.79 per ounce.

If you have any questions and comments on commodities today, use the form below to reply.

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