Lower Oil Prices Lend Support For The Gold Rally

Key Points:

• Oil prices declined for a second consecutive week due to optimism over renewed U.S.-Iran talks to reopen the Strait of Hormuz, with Iran and Oman reaching a preliminary agreement on a partial shipping route easing supply concerns.
• Despite a recent rebound in Brent crude prices, oil remains about $20 per barrel below its July peak, pressured by factors such as downward revisions in global oil demand for 2026 by the IEA and ongoing OPEC+ supply increases.
• OPEC+ approved a final quota increase for September 2026, concluding the phased rollback of 2023 voluntary supply cuts, while a separate 2 million barrels per day cut from 2022 remains in effect through year-end.
• The U.S. Energy Information Administration forecasts that reopening the Strait of Hormuz and rising production will lead to global oil oversupply by 2027, with Brent crude prices expected to average $65 per barrel that year.
• In parallel, gold prices have surged over 6% this week, benefiting from easing inflation fears linked to falling oil prices and a softer U.S. dollar, with strong central bank purchases supporting the rally despite high interest rates limiting safe-haven demand.