Oil hits $90 as gold reaches 10-week high amid Iran standoff

Oil prices touched $90 a barrel on Tuesday while gold climbed to a 10-week high of $4,400 per ounce as the U.S.-Iran stalemate over the Strait of Hormuz deepened, sending conflicting signals through global commodity markets now caught between supply-shock fears and shifting monetary policy expectations.

Oil Surges as Strait of Hormuz Shipping Stalls

Brent crude surged 1.6 percent on Tuesday, briefly reaching $90 a barrel before retreating to approximately $88, according to the New York Times. West Texas Intermediate rose 1.8 percent, surpassing $83 a barrel. The rally extends a sharp four-day climb that has erased hopes of cooling energy costs.nytimes

The immediate catalyst was President Trump's expansion of U.S. negotiating terms, including demands for financial reparations from Iran "for all the lives they have taken and those they have severely injured with their roadside explosives," as he posted on social media Monday. Trump described his approach as "semi-negotiating" in an interview with Axios, saying the U.S. would conditionally scale down military efforts to reopen shipping lanes.streamlinefeed+1

Shipping through the strait has nearly halted. Maritime analytics firm Kpler reported that only a few oil tankers have traversed the waterway since the weekend, down from roughly 130 ships daily before the conflict began in February. U.S. gasoline prices have risen 38 percent since the war started, reaching $4.11 per gallon.nytimes

Gold Rally Fueled by China and Labor Market Weakness

Gold's climb to its highest level since June 5 was driven by a separate set of forces. The People's Bank of China added approximately 20 tons to its reserves in July, the largest monthly increase since October 2023 and its 21st consecutive month of purchases. Chinese gold-backed ETFs recorded their longest streak of inflows in months, while institutional investors increased bullion positions as a hedge against broader market volatility.anews+1

COMEX gold rose 0.89 percent to $4,459 per ounce, while SHFE gold and silver futures extended gains for a sixth straight session. Weak U.S. employment data — with ADP and non-farm payrolls falling well short of expectations — lowered expectations for further Fed rate hikes and triggered concentrated short-covering in precious metals.news.metal

The Inverse Relationship Defining 2026

The simultaneous rally in both oil and gold marks a departure from the dominant pattern of 2026, in which the two commodities have largely moved in opposite directions. Higher oil has driven inflation fears, pushing the Fed toward tighter policy and strengthening the dollar — conditions that typically pressure gold. When oil fell 7 percent on July 27 after a temporary ceasefire, gold rallied the same day.mitrade

Tuesday's joint advance reflects markets pricing in two distinct risks: a prolonged supply disruption lifting oil, and a weakening U.S. economy plus Chinese structural demand supporting gold independently of the rate channel. Scott Rubner, strategist at Citadel Securities, called the current setup "one of the most attractive rally opportunities in months" for precious metals. UBS ↘ 2.95% expects gold to reach $5,000 per ounce in the first half of 2027.news.metal

Markets now await U.S. July CPI data due later this week for further clarity on the Fed's path forward.anews+1