Oil, gold and other precious metals prices fell, reflecting the decline in global markets due to negative data on the US economy, which indicated that it is approaching recession.
Oil
Oil futures extended losses in a volatile session on Monday as fears of a U.S. recession outweighed concerns that rising tensions in the Middle East could hit supplies from the world’s biggest oil-producing region.
Asian markets fell as investors dumped risky assets on concerns about a recession in the United States and believed that a rapid interest rate cut would be necessary to rescue growth.
Brent crude futures were down $1.5, or 2%, at $75.27 a barrel at the time of writing, not far from their lowest level since January.
West Texas Intermediate crude futures fell $1.72, or 2.35%, to $71.80 a barrel.
Reuters quoted Warren Patterson, an analyst at ING, as writing in a note that fears of a recession in the United States, which were raised by a weak July jobs report issued on Friday, are exacerbating the anxiety that has dominated the oil market for some time about Chinese demand.
A decline in diesel consumption in China, the largest contributor to the growth in world oil demand, is affecting oil prices.
Analysts said oil also came under pressure after OPEC+ maintained its plan to phase out voluntary production cuts from October, meaning supplies will rise later in the year.
OPEC oil output rose in July despite output cuts by the group, a Reuters survey showed on Friday.
Prices were supported on Sunday by geopolitical concerns, amid the ongoing war on Gaza, a day after negotiations in Cairo ended without results.
Israel and the United States are anticipating a dangerous escalation in the region after Iran, Hezbollah and the Palestinian Islamic Resistance Movement (Hamas) vowed to respond to the assassination of Ismail Haniyeh, head of Hamas’ political bureau, and Fuad Shukr, a senior Hezbollah military commander, last week.
gold
Gold prices fell in volatile trading on Monday as investors liquidated positions amid a broad sell-off in stocks, although analysts said gold’s safe-haven appeal remained strong as fears of a U.S. recession mounted.
Spot gold was down 2.7% at $2,377 an ounce at the time of writing, while U.S. gold futures lost $1,665 to $2,428.90.
“Gold’s volatility is indicative of the level of panic gripping equity markets,” said Adrian Ash, director of research at Bullion Vault.
Stock markets fell, and at one point in today’s session, losses in Japanese stocks exceeded those of Black Monday in 1987, as fears of a U.S. recession prompted investors to dump risky assets.
Data released on Friday showed U.S. job growth in July fell short of expectations and the unemployment rate rose to 4.3 percent, pointing to a potential weakness in the labor market and increasing risks of recession.
As for other precious metals, silver fell in spot transactions by 7.06% to $26.54 per ounce.
