Gold and oil prices rise due to tensions in the Middle East

Oil prices climbed on Thursday to levels not seen in over two months after US President Donald Trump ordered the relocation of American personnel from the Middle East. Gold climbed as much as 0.6% to about $3,373 an ounce.

By 12:30 a.m. GMT, Brent crude futures had gained 15 cents, or 0.2%, reaching $69.92 a barrel, while US West Texas Intermediate (WTI) crude added 22 cents, or 0.3%, to trade at $68.37 a barrel. 

Trump said on Wednesday that US personnel were being moved out of the region because “it could be a dangerous place,” and reiterated that the United States would not permit Iran to develop a nuclear weapon.

His remarks followed reports stating that Washington is planning a partial evacuation of its embassy in Baghdad and will allow military dependents to leave various posts across the Middle East due to elevated security risks, according to US and Iraqi officials. It stoked concerns that rising tensions with Iran could interrupt oil supplies.

Both benchmarks had jumped more than 4% on Wednesday, marking their highest closes since early April.

Iraq, OPEC’s second-largest oil producer after Saudi Arabia, plays a key role in global supply. Iran’s Defense Minister, Aziz Nasirzadeh, warned that Tehran would target US bases in the region if nuclear negotiations collapse and conflict breaks out with Washington. Trump has repeatedly threatened military action against Iran should it fail to agree to a new nuclear deal.

Adding to the market’s upbeat mood was growing optimism over a potential US-China trade agreement, which could lift fuel demand in the world’s two biggest economies. 

Gold also felt the impact of geopolitical uncertainty

On Thursday, gold rose for a second straight day as tensions in the Middle East increased its appeal as a safe haven, and President Trump said he would inform trading partners of forthcoming tariff rates within two weeks.

The bullion climbed as much as 0.6% to about $3,373 an ounce, building on a 1% gain from the previous session, which was also driven by a weaker dollar. 

Trump said he planned to send letters to US trading partners in the next one to two weeks to set unilateral tariff rates, ahead of a July 9 deadline to reinstate higher duties on many economies. He also claimed that a trade framework with China has been finalized, keeping levies between the two powers at current levels.

Ongoing worries about global trade tensions and geopolitical risks have unsettled markets this year, increasing gold’s reputation as a store of value in uncertain times. 

The precious metal has climbed about 28% so far this year and hit an all-time high in April, supported in part by increased purchases from central banks.

As of 7:59 a.m. Singapore time, spot gold was trading up 0.3% at $3,364.43 an ounce. Other precious metals, including silver, platinum and palladium, also posted gains.