Geopolitical Tension Drives Brent to $100, Fed Hikes Keep Gold Steady

Brent crude surged to $100 levels as tensions between U.S. and Iran intensified, Hürmüz Strait flows slowed, and security risks in the Red Sea rose, while expectations of Fed rate hikes climbed to 35.8 % for July and 70.8 % by September.

Political Heat: Policy Moves and Rate Outlook

■The USD index rose 0.7 % week‑on‑week to 101.5.

■U.S. 2‑year yield at 4.35 %, 10‑year at 4.69 %, both up 15‑16 basis points.

■The ECB kept its three core rates unchanged, noting the ongoing impact of Middle‑East energy shocks on inflation.

Oil Markets: Geopolitical Fallout

■Brent prices rose 7.3 % in the week, nearing $110 per barrel, as OPEC+ signals a daily 188k barrel increase.

■Husayn attacks on Saudi tankers heightened regional energy flow concerns.

■U.S. gasoline and crude inventories rose 800k and 2 m barrels respectively, tempering price gains.

Gold and Precious Metals: Reserve Increases and Market Dynamics

■Central banks purchased a net 41 ton of gold in May, with Poland 18 ton and China 10 ton leading.

■Silver prices rose 4.1 %, while palladium slipped 0.4 %.

■A strong USD and high bond yields created selling pressure in precious metals.

Base Metals: China and Indonesia Impacts

■Copper imports hit a nine‑month high, with Shanghai stocks at their lowest since February 2024.

■Aluminum prices held steady amid resumed Gulf plant operations and rising Indonesian output.

■Lead stocks hit a 1970s peak, boosting supply‑side pressure.

Agriculture: Black Sea Risks and Weather

■Corn and wheat shipping risks escalated due to Russian‑Ukrainian conflict, supporting prices.

■Soybean risk from heat‑dry conditions, coupled with high oil prices, boosted bio‑fuel demand.

■Cocoa prices fell 3.7 % due to increased West African supply.

Markets see geopolitical tension pushing oil higher, while Fed tightening expectations underpin resilience in gold and precious metals. China’s rising exports and industrial demand keep base metals balanced, while weather and logistical risks in agriculture continue to fuel short‑term volatility.