Oil prices continued to rise today as efforts to end the war between the United States and Iran faltered, as the vital Strait of Hormuz remains almost completely closed, preventing global buyers from accessing energy supplies from key production regions in the Middle East.
Brent crude futures for June delivery rose 2.13 percent to $103.95 a barrel after rising 2.8 percent in the previous session, hitting their highest closing level since April 7. The contract rose for the seventh straight day.
U.S. West Texas Intermediate crude for June delivery climbed 2.21 percent to $98.56 after rising 2.1 percent in the previous session.
Limited Flow
A U.S. official said Monday that President Donald Trump was unhappy with Iran's latest proposal to end the war.
Iranian sources revealed on Monday that Tehran's proposal avoided addressing its nuclear program until hostilities cease and maritime disputes in the Gulf region are resolved.
"For oil traders, it's no longer the rhetoric that matters, it's the actual flow of crude through the Strait of Hormuz, and at the moment, that flow is still limited," Fouad Rizqzadeh, market analyst at Citiindex and Forex.com, said in a note.
Even if a solution is reached, production disruptions and logistical challenges mean it could take months to recover, he noted.
Gold in the Syrian market
The price of a gram of 21-carat gold in the Syrian market, on Tuesday, decreased by 300 Syrian pounds in the new currency from the price recorded yesterday, Monday.
According to the bulletin issued by the General Authority for Precious Metals Management, the price of a gram of 21-carat gold was 16950 pounds of the new currency sold, and 16650 new pounds were bought.
The price of a gram of 18-carat gold was 14500 new pounds for sale, and 14200 new pounds for buying.
Gold Globally Declines in Spot Transactions
Gold also fell to a three-week low today amid growing inflation concerns due to higher oil prices, while investors await important central bank decisions this week to see if the war in the Middle East has changed interest rate expectations.
Spot gold fell 1.11 percent to $4,628.88 an ounce, its lowest level since April 7. U.S. gold futures for June delivery also fell 1.10 percent to $4,643.70.
Marex analyst Edward Meyer said: "Geopolitical developments continue to be the main driver of gold prices. "In the event of a deal between the United States and Iran or an interim agreement, the dollar should fall and gold is likely to rise."
While gold is a hedge against inflation, higher interest rates make yield-generating assets more attractive, reducing the appetite for buying gold.
The Federal Reserve is largely expected to keep interest rates unchanged on Wednesday at the end of its two-day meeting.
Investors will also focus on decisions from other central banks this week, including the European Central Bank, the Bank of England and the Bank of Canada.
In other precious metals, spot silver fell 3 percent to $73.23 an ounce, platinum fell 1.5 percent to $1,953.50 and palladium fell 2.1 percent to $1,445.50.