How Iran diplomacy moved oil, bonds, currencies and gold
Brent and West Texas Intermediate dipped to $98.91 and $89.93 per barrel in early Asian trade as markets assessed US-Iran diplomacy and the restart of Saudi Arabia’s East-West Pipeline.[8] Lower energy prices helped euro-zone bond yields retreat, but expectations of further rate increases kept the dollar near a two-month high and contributed to a 0.2% fall in spot gold to $4,345.55 an ounce.[3][5][8]
Why it matters
The moves illustrate the transmission chain from the Strait of Hormuz and Gulf oil infrastructure to inflation expectations, central-bank pricing, bond yields and dollar-sensitive assets such as gold.[5][8]
Key insights
- Iran said the Strait of Hormuz, which carried about one-fifth of global energy supplies before the war, could reopen within seven days if the United States lifts its blockade of Iranian ports.[8]
- Saudi Arabia restarted its East-West Pipeline after drone attacks had halted crude loadings at Yanbu, improving the prospect of exports through the Red Sea.[8]
- Traders reduced their pricing for additional European Central Bank tightening this year to about 35 basis points from 40 basis points on Friday as energy prices retreated.[8]
- A stronger dollar raises the local-currency cost of dollar-priced bullion for overseas buyers, reinforcing the pressure that elevated interest rates place on gold.[5]