WTI oil prices surged during early Friday trading, reaching their highest levels since January before paring some gains to trade above $72 per barrel. The sharp rise in crude prices follows Israel’s surprise air strikes on Iranian nuclear facilities and the assassination of senior Iranian military and scientific figures. Tehran responded by launching attack drones, marking a significant escalation in the long-simmering tensions between the two nations. This could potentially spiral into full-scale war, with unpredictable consequences for the Gulf region. Such a development would be of major concern to oil traders. A conflict in the Gulf could disrupt traffic through one of the world’s key shipping routes and interrupt oil supply from a region responsible for roughly a quarter of global production. Against this tense backdrop, market participants will likely remain highly alert, with increased volatility and the potential for further price increases expected in the days ahead. Meanwhile, US inflation data for May, released on Wednesday, rose compared to the previous reading but came in below expectations. This has fuelled speculation that the Federal Reserve may cut interest rates in September, placing pressure on the US dollar, which weakened against other major currencies. Given the inverse correlation between gold and the dollar, this dynamic supports gold prices. Looking ahead, there may be further upside potential for gold, particularly if today’s US producer price inflation data also underperforms forecasts, potentially triggering additional dollar losses and further strengthening the appeal of the precious metal.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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