Oil prices slipped as traders assessed the implications of diplomatic overtures on multiple fronts –including Russia-Ukraine peace talks and US-Iran nuclear negotiations – while a cautious outlook for China’s economy further dampened sentiment.
Brent crude futures (BZ=F) lost 0.7% to $65.11 a barrel, while West Texas Intermediate futures (CL=F) retreated 0.7% to $62.25 a barrel.
The possibility of a ceasefire between Russia and Ukraine has raised expectations of a more stable supply outlook, while ongoing negotiations between Washington and Tehran over Iran’s nuclear programme added further complexity to the demand-supply calculus.
Discussions over the nuclear deal appeared to hit an impasse on Monday. Iran’s deputy foreign minister, Majid Takhtravanchi, was quoted by state media as saying talks would “lead nowhere” if the US continued to demand that Tehran entirely halt uranium enrichment.
The comments followed remarks from US special envoy Steve Witkoff, who reiterated on Sunday that Washington would require any new agreement to prohibit enrichment – seen as a key step in the development of nuclear weapons.
A deal would have paved the way for the easing of US sanctions and allowed Iran to raise oil exports by 300,000 barrels to 400,000 barrels per day, StoneX analyst Alex Hodes said.
Such a deal would have paved the way for an easing of US sanctions, potentially allowing Iran to increase its crude exports by 300,000 to 400,000 barrels per day, according to Alex Hodes, an analyst at StoneX.
Adding to bearish pressure was fresh data from China, the world’s largest oil importer, showing a slowdown in industrial production and retail sales. The weaker-than-expected figures reinforced concerns about the country’s near-term demand for fuel.
BMI analysts projected a year-on-year fall of 0.3% in Chinese oil consumption in 2025, citing a broad-based slowdown across oil product categories.
“Even if China adopts stimulus measures, it may take time to have a positive impact on oil demand,” they added.
Gold prices edged lower on Tuesday as easing geopolitical tensions and renewed optimism over global trade tempered investor appetite for traditional haven assets.
Gold futures (GC=F) retreated 0.2% to $3,226.00 per ounce at the time of writing, while the spot gold price fell 0.6% to $3,224.75 per ounce.
The declines come amid tentative signs of progress on two major geopolitical fronts: US-China trade relations and the Russia-Ukraine conflict.
"We are seeing a knee-jerk response to the US credit downgrade wear off and there's some hope of a truce between Ukraine and Russia," said Kyle Rodda, Capital.com's financial market analyst.
US president Donald Trump said on Monday that Russia and Ukraine would immediately start negotiations toward a ceasefire, further buoying market sentiment and reducing the urgency for defensive positioning.
The moderation in gold follows a period of heightened volatility triggered by Moody’s downgrade of the US sovereign credit rating to “Aa1”. While initially supportive for gold, the downgrade’s impact has since faded.
"We are seeing buyers emerge on dips below $3,200. However, I think we are due a bigger pullback, especially if there's further easing in geopolitical risks and we see upward pressure on yields building from US fiscal policy."
Improved risk appetite was also supported by a temporary 90-day trade truce between the US and China, helping to lift equity markets globally. The rebound in equities has further diminished the near-term allure of bullion.
Traders are also adjusting expectations for monetary policy. Market participants are now pricing in at least two interest rate cuts by the Federal Reserve in 2025, following softer-than-expected inflation and retail sales data in the US. While such expectations typically weigh on the dollar and support gold prices, that dynamic has so far failed to materialise.
The pound strengthened modestly on Tuesday following news of a fresh agreement between the UK and European Union aimed at easing trade frictions, particularly around checks on food, livestock and agricultural goods.
Sterling rose 0.2% to $1.3382 against the dollar, with investors broadly welcoming the deal amid forecasts that it could deliver a £9bn boost to the UK economy.
The agreement, seen as a step toward improving post-Brexit trade relations, helped lift market confidence ahead of key inflation data.
Attention now turns to April’s consumer price index (CPI) report, set to be released on Wednesday, which is expected to offer further insight into the Bank of England’s monetary policy outlook.
Economists anticipate a slight acceleration in core CPI—which strips out food, energy, alcohol, and tobacco prices—with a reading of 3.6% year-on-year, up from 3.4% in the previous release. A higher-than-expected print could raise the likelihood of the BoE maintaining tighter policy for longer.
The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, fell 0.3% to $100.14.
