- Oil prices fell Tuesday as renewed diplomatic efforts to end the US-Iran war raised hopes of de-escalation, CNBC reported. Brent crude futures for December delivery slipped 0.87% to $114.80 a barrel and US West Texas Intermediate futures declined 0.86% to $100.88, leaving Brent about $13.92 above WTI (Lumida calculation). Bloomberg noted oil fell for a second day.
- The pullback followed talks between Saudi Arabia, Turkey, Pakistan and Iranian officials in Tehran on Monday. Riyadh said the discussions aimed to keep diplomatic channels open and prevent another escalation, and representatives from Qatar, which has helped mediate between Washington and Tehran, also traveled to the Iranian capital on Sunday, Reuters reported.
- Gold held near $4,000 an ounce as traders prepared for a Federal Reserve decision expected to keep rates steady. Spot gold edged down 0.2% to $4,007.25 in Singapore trading, silver slipped 1.2% to $53.30, and the Bloomberg Dollar Spot Index was 0.1% higher; on Friday gold dropped to its lowest since mid-July.
- Markets are pricing roughly a 10% chance of a Fed hike this week, though elevated energy prices are still prompting bets on a hike before year-end. “Gold will need to establish a floor,” wrote Standard Chartered’s Suki Cooper, warning that support would fade quickly if the metal doesn’t find technical support at $3,886 an ounce.
What Happened?
Crude retreated after the four-country meeting in Tehran, where the parties agreed to continue to engage to advance regional peace and security, according to Iranian state media. The diplomatic push comes as President Donald Trump told Fox News on Sunday that he was approaching a decision on whether to strike a deal with Iran or intensify military operations, suggesting more attacks remain an option. In metals, gold was little changed after adding 0.5% in the previous session, as stocks extended gains on revived enthusiasm for the AI trade following last week’s selloff, Bloomberg reported.
Why It Matters?
Oil and gold are both trading off the same two forces: the US-Iran war and the Fed. Lower crude eases some of the inflation pressure that has kept rate-hike bets alive, but the prices remain elevated, with Brent still well above $100. Gold has been hit by those inflation concerns and by the unwind of the AI trade, as investors sold it to cover losses elsewhere when technology stocks tumbled. Higher borrowing costs are a headwind for gold because it pays no interest, so the Fed’s path remains central for the metal.
What’s Next?
Traders will watch the Fed’s decision this week and any signal on a hike before year-end, as well as Trump’s decision on whether to pursue a deal with Tehran or step up military action. Oil’s losses have been limited because a lasting resolution looks fragile, with Iran-backed Houthi militants continuing attacks on Saudi Arabia over the weekend. For gold, the $3,886 level flagged by Standard Chartered is the key technical marker if the metal fails to hold around $4,000.
