Oil prices rose on Thursday after President Trump revoked Chevron’s license in Venezuela, raising supply concerns. Brent futures climbed 2.1%, while U.S. crude rose 2.5%. In contrast, gold prices fell to lows not seen since February due to a strengthening dollar and recent U.S. economic data. Tariffs on Canada and Mexico are looming, impacting market expectations around interest rates and inflation.
Oil prices experienced an increase on Thursday, driven by concerns regarding potential global supply disruptions after President Donald Trump rescinded Chevron’s license to operate in Venezuela. This decision by the Trump administration follows earlier measures imposed by the previous government. In response to ongoing geopolitical tensions, OPEC+ is contemplating a production increase to evaluate the impact of U.S. sanctions on oil supplies from Venezuela, Iran, and Russia.
Brent crude futures saw a rise of 2.1%, climbing by $1.51 to reach $74.04 per barrel, while U.S. crude futures for April rose by 2.5%, or $1.73, settling at $70.35 per barrel. Meanwhile, gold prices fell to their lowest levels since February 7, primarily attributed to a strong dollar influenced by recent economic data.
The dollar gained traction against most major currencies as the U.S. reported a 2.3% growth in GDP for the fourth quarter, down from a 3.1% increase in the prior quarter. Additionally, U.S. unemployment claims rose by 22,000 to a three-month high, reaching 242,000, surpassing predictions of 222,500. Trump’s announcement regarding new tariffs on Canadian and Mexican goods, set to take effect in early March, added to market volatility.
The dollar index climbed 0.8%, reaching 107.2 at 20:55 GMT, with fluctuations noted between 106.5 and a high of 107.2 during the session. The Canadian dollar weakened by 0.7% to 0.6922, while the Australian dollar decreased by 1.1% against the U.S. dollar, trading at 0.6235.
As gold prices continued to decline, traders noted a shift away from the key psychological mark of $2900, driven by profit-taking activities. The recent drop saw gold prices fall by 1.35%, settling at $2877 per ounce, marking the lowest price since February 12. This plummet followed a recent peak, with investors now keenly awaiting further economic indicators.
The dollar’s strength increased prices of dollar-denominated gold futures, creating a financial burden for international investors. Expectations for an interest rate cut by the Federal Reserve have lessened significantly, with only a 2.5% probability indicated for a 0.25% reduction in March. Market participants are also looking forward to upcoming data regarding U.S. GDP growth and unemployment claims, alongside insights into the Fed’s future monetary policies regarding inflation.
Interestingly, gold holdings at the SPDR Gold Trust declined by 0.86 tons to a total of 906.96 tons, slightly below the August 2023 peak of 907.82 tons. These market dynamics underscore the continuing interplay between geopolitical developments, economic data, and commodity prices.
In summary, oil prices surged due to Trump’s actions against Chevron in Venezuela amid concerns over global supply disruptions. Concurrently, the strong U.S. dollar negatively impacted gold prices, which reached notable lows. Market trends indicate reduced expectations for a Federal Reserve rate cut, as traders prepare for important economic data releases. Overall, these developments illustrate the complex interaction of various economic factors influencing the markets.
Original Source: www.economies.com
