Market Overview

At the close on October 7 local time, international crude oil edged lower while spot gold plunged, hitting a two-month low intraday. Entering the Asian trading session on October 8, crude oil and gold rebounded simultaneously amid sudden geopolitical news from the Middle East. Brent crude recovered above $102, and spot gold climbed back to around $4130.
 

Crude Oil Market

1. Overnight close (Oct 7) NYMEX WTI Nov crude futures: settled at $88.28 per barrel, down $1.16, or 1.30%. ICE Brent Dec crude futures: settled at $100.20 per barrel, down $0.38, or 0.38%.
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3. Asian session (Oct 8) Driven by reports of rising US-Iran tensions, crude prices surged. Brent crude peaked at $102.34 per barrel, up 2.14%. WTI crude rose to near $90 per barrel, a gain of roughly 2%.
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5. Key market drivers
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• Middle East geopolitical risk: US media Axios cited US officials saying the US Department of Defense has ordered Central Command to prepare for potential large-scale military operations targeting Iran, though no final strike order has been issued. Markets worry shipping through the Strait of Hormuz may be disrupted again. Around 30% of global crude oil passes through this strait. Any blockage would directly hit global crude supply and push up oil prices and inflation expectations.
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• Offsetting supply factor: The International Energy Agency (IEA) has agreed to accelerate strategic reserve releases, prioritizing diesel to curb fuel prices, acting as a cap on oil gains.
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• OPEC+ production cuts remain in place: Major oil producers keep adhering to output reduction agreements. Middle East crude exports stay tight, and tanker freight rates remain elevated, supporting oil prices.
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Gold Market

1. Overnight close (Oct 7) Spot gold: closed at $4109.78 per troy ounce, down 1.3%. It dipped to $4066.30/oz intraday, the lowest level since August. COMEX Dec gold futures: settlement price $4140.70 per troy ounce, down 1.1%.
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3. Asian session (Oct 8) Geopolitical concerns brought safe-haven buying. Spot gold recovered to around $4129, up approximately 0.5% on the day, partially retracing the prior day’s sharp drop.
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5. Key market drivers
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• Fed policy expectations (dominant factor for gold): The Federal Reserve released the minutes of its September FOMC meeting on October 7. Most officials left the door open for another rate hike within the year. Officials warned that rising energy costs could reignite inflation. Markets are pricing in higher-for-longer interest rates, lifting long-dated US Treasury yields and strengthening the US dollar. Gold bears no interest income, so rising real yields are the primary drag on gold prices. According to CME FedWatch, markets see a high probability that the Fed holds rates steady at the October meeting, while odds for a December rate hike have climbed.
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• Central bank gold purchases provide downside support: Latest data from the People’s Bank of China shows gold reserves stood at 77.47 million ounces at end-September, a monthly increase of 740,000 ounces, marking the 23rd consecutive month of gold accumulation. Sustained gold buying by global central banks offers bids during sharp corrections and limits deep declines.
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• Divergent pricing logic: Traditionally, geopolitical conflicts lift both crude oil and gold. However, the current market shows a different pattern: Middle East crises push oil higher, which fuels inflation expectations and lifts Treasury yields, pressuring gold. This creates frequent decoupling where oil rises and gold falls. Safe-haven buying for gold only temporarily dominates if geopolitical risks escalate sharply.
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Analyst Views

1. Peter Grant, Precious Metals Strategist: Upward pressure on the US dollar and Treasury yields will likely persist in the near term. Gold may test the $4000 level. Still, persistent central bank purchases remain the most important medium-to-long-term support.
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3. Energy Analyst: The crude oil market is currently caught between geopolitical risk premiums and IEA reserve releases. Without actual military conflict between the US and Iran, oil prices are likely to pull back after the rally. If tanker transit in the Strait of Hormuz is disrupted, Brent crude could quickly break above $110.
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5. Macro Analyst: Investors should monitor US CPI inflation data and Fed speeches. A rebound in inflation will reinforce the higher-for-longer rate narrative and weigh on gold. Crude oil will continue trading on both inflation expectations and Middle East supply risks.
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Key Events to Watch

1. Middle East developments: potential US-Iran military conflict, tanker shipping status in the Strait of Hormuz
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3. US inflation and employment data, speeches by Fed officials
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5. Monthly crude oil supply-demand reports from IEA and OPEC
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7. Monthly gold reserve figures from global central banks