Markets Calm Down: Oil and Gold Retreat as Geopolitical Fears Fade

Source: Kapitales Research

Highlights:

• Oil and gold pulled back from recent highs after Donald Trump played down fears of imminent US military action against Iran, easing the geopolitical risk premium in markets.
• Brent crude and Nymex both fell about 2.4%, while gold slipped 0.5% from a record peak, as investors trimmed safe-haven positions.
• Global markets saw a rotation out of tech stocks, with Asian tech shares falling, the yen rebounding on intervention warnings, and Japanese bond yields easing from record levels.

Global markets saw a shift this week as oil prices eased from recent highs and gold retreated from record peaks, following remarks from U.S. President Donald Trump that helped calm fears of imminent military conflict in the Middle East. At the time of writing, traders were digesting the impact of these comments, which appeared to reduce the geopolitical “risk premium” built into commodity prices.

Oil and Gold Pull Back After Rally

Both Brent crude futures and U.S. Nymex crude fell sharply on Thursday, sliding about 2.4 per cent from multi-month highs reached earlier in the week. Brent dropped to roughly $64.94 a barrel while Nymex also dipped to around $60.51 a barrel after Trump’s remarks suggested tensions with Iran might be easing. Gold, a traditional safe-haven asset, also eased back after recent record surges. Prices fell around 0.5 per cent to roughly $4,598 per ounce, stepping back from an all-time high struck in the previous session as fears of conflict softened.

Trump’s Comments Help Soothe Markets

Investors had been pricing in geopolitical risk due to unrest in Iran and the potential for wider confrontation in the Middle East. However, President Trump told reporters that he had been assured that the crackdown on protesters in Iran was subsiding and that there were no current plans for large-scale executions or military action, helping to reduce market anxiety. The shift in tone appeared to cool the earlier rally in commodities that had benefited from heightened tension, where higher prices are often driven by concerns over supply disruptions in the region.

Equities, Currencies and Bonds Also React

Elsewhere in markets, tech stocks extended recent sell-offs, particularly in Asian trading, as investors rotated out of high-flying technology and artificial intelligence sectors in search of value. Major yen weakness briefly emerged as the Japanese currency hit its lowest against the U.S. dollar since mid-2024 before bouncing on intervention warnings, and Japanese bond yields backed off record levels. Stock indexes in Asia were mixed, with Japan’s Nikkei 225 easing as tech shares fell, even as broader indexes like Topix showed resilience with modest gains.

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