The gold and oil price fell on Thursday, as traders assessed geopolitical tensions.
Silver prices plunged by 7% and gold dropped more than 2% as traders pushed back their expectations of an imminent Federal Reserve interest rate reduction.
The oil prices fell by almost 3% Thursday, as investors opted to focus on the International Energy Agency’s lower global demand forecast for the year 2026 rather than the reduced threat from US strikes on Iran.
As rate-cut bets faded, the focus shifted to strong US economic indicators.
The gold and silver tumble
Silver was trading at $76.368 an ounce at the last close, down by 9.1%. Gold traded on COMEX at $4,970.70, down by 2.5%.
The US Bureau of Labor Statistics released data on Wednesday that showed a surprising pickup in employment growth within the US economy.
The US Nonfarm Payrolls (NFP) increased by 130 000 in January. This was well over the 70,000 expected and marked the largest monthly increase of jobs since December 2024. The unemployment rate also decreased to 4.3%, from 4.4%.
On Friday, however, an initial report on jobless benefits showed that 227,00 Americans had filed for unemployment in one week, as opposed to the analyst’s forecast of 222,000.
In a recent report, Vishal Chaturvedi (editor at FXStreet) stated that “the stronger labour data decreases the scope of near-term policy easing and reinforces expectations that the Fed will likely remain on hold for the next two meetings.”
Gold’s non-interest bearing nature is a slight headwind.
On Wednesday, traders absorbed the latest comments made by Federal Reserve officials.
Kansas City Fed president Jeffrey Schmid said that inflation was still at 3% and that the Fed should continue to be restrictive. He also suggested that further rate cuts might cause inflation to remain high for longer.
The US Consumer Price Index release (CPI), which is scheduled for Friday, will be the focus of attention, despite market expectations that still include nearly 50 basis point of easement this year.
CME FedWatch Tool indicates that the window of most likely first rate cuts is between June and July.
Chaturvedi added:
In this context, Gold will likely remain in a range for the near-term, with waning expectations of early Fed rate reductions being offset by persistent geopolitical risk.
Oil slumps
The market was gripped by concerns over a lower demand, and oil prices fell nearly 3%.
International Energy Agency announced Thursday it expects a slowing of the global demand for oil in this year.
Even with the disruptions in production that took place in January, this projection shows a substantial supply surplus.
In its monthly report on oil, the agency estimates that global oil supply will continue to exceed demand in 2026 by 3,73 million barrels a day.
The surplus forecast is significant, and represents nearly 4% world demand. It is also higher than other projections.
The IEA said that “escalating geopolitical conflicts, extreme weather in North America and Kazakh disruptions of supply sparked a reversal from a bearish market.”
After the release of IEA’s monthly report the Brent and WTI crude oil benchmarks reversed earlier gains that had been backed by concerns about US-Iran tensions and moved into negative territory.
After talks on Wednesday with Israeli Premier Benjamin Netanyahu, US President Donald Trump said that an agreement definitive on Iran’s future path has yet to be reached. However, negotiations will continue with Tehran.
Trump said on Tuesday he would consider deploying a 2nd aircraft carrier in the Middle East, if an agreement with Iran was not reached.
Date and location of the next round have not been announced.
The early price increases were also limited due to a significant increase in US crude stocks.
The Energy Information Administration reports that US crude oil inventories rose unexpectedly by 8.5 millions barrels, to 428,8 million barrels, last week.
The build was significantly higher than the 793,000 barrels increase that analysts predicted in a Reuters survey.
This article Commodity Wrap: Gold, Silver tumble as rate-cut bets fail; Oil Slips 3% first appeared on The ICD
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