Oil prices rose on Monday as optimism over a US-China trade agreement boosted sentiments in the market.
Prices of base metals also climbed on expectations of more demand from the biggest consumer and producer, China.
Meanwhile, gold prices slipped more than 2% on declining safe-haven demand for the metal.
Silver prices on COMEX also fell sharply, along with platinum and palladium.
Oil gains
On Monday, oil prices rebounded from earlier declines. This recovery was fueled by optimism surrounding a potential trade deal framework between the US and China, which helped to offset worries about softening demand for crude.
US Treasury Secretary Scott Bessent announced on Sunday that American and Chinese officials have established a “substantial framework” for a trade agreement.
This framework, developed during trade discussions this week, aims to prevent the imposition of 100% US tariffs on Chinese goods and secure a deferral of China’s rare-earth export controls.
Last week, oil prices surged due to the Trump administration’s sanctions on Russia’s top two oil producers, Rosneft and Lukoil.
The administration also sought to reduce energy purchases from Russia by India and China.
Monday’s gains followed a week-long rally, which saw front-month West Texas Intermediate gain close to 12%.
“Crude had come under intense selling pressure since the summer as it became apparent that supply was plentiful while global demand growth was slowing,” said David Morrison, senior market analyst at Trade Nation.
The International Energy Agency (IEA) estimates a potential oversupply of approximately 4 million barrels per day in the market for the upcoming year.
Morrison said:
“If so, the market could comfortably deal with a shortfall in Russian exports.
At the time of writing, the WTI crude price was at $61.62 per barrel, up 0.2%, while Brent was largely flat at $65.16 a barrel.
Bullion slips
Gold prices fell 2% on Monday, dropping from their record highs.
This decline was due to a decrease in safe-haven demand, as investors’ risk appetite for equities increased.
Optimism regarding de-escalating US-China trade tensions fueled this shift.
Investors are now awaiting major central bank meetings this week for potential signals on interest rate cuts.
Last week, gold had reached a record high of $4,381, despite its daily MACD indicating it was significantly overbought.
At the time of writing, the December gold contract on COMEX was at $4,001.79 per ounce, down 3.3% from the previous close.
Gold, a traditional safe haven, reached a record high of $4,381.21 per ounce on October 20.
However, the price of gold fell by 3.2% last week due to signs of easing trade tensions between the US and China, the world’s two largest economies.
On Sunday, negotiators from both countries outlined a framework for a deal to temporarily halt stricter American tariffs and Chinese export controls on rare earths.
US President Donald Trump and China’s Xi Jinping are scheduled to meet on Thursday to continue discussions on a trade accord.
Concurrently, the market anticipates a 97% probability of a 0.25% interest rate reduction at the Fed’s meeting on Wednesday.
Gold, a non-yielding asset, typically thrives in periods of low interest rates.
While many analysts and investors predict further increases for the precious metal, with some even forecasting prices as high as $5,000 per ounce, others express doubts regarding the sustained growth of its recent significant rally.
Analysts at Capital Economics have revised their gold price forecast downwards, now expecting it to reach $3,500 per ounce by the end of 2026.
Meanwhile, silver prices were 4.5% down at $46.373 per ounce.
Base metals
The three-month copper contract on the London Metal Exchange was at $10,963 per ton, up 0.2%.
Meanwhile, the aluminium contract was 0.7% up at $2,880.05 per ton, while zinc rose 1.1% to $3,058.10 per ton.
A Reuters poll indicates that analysts have increased their copper price forecasts for next year.
This adjustment follows multiple mine disruptions, which have heightened concerns regarding potential shortages and market deficits.
Benchmark copper on the London Metal Exchange reached a 16-month high in October, following reports of mining issues in Indonesia, Congo, and Chile.
Copper, often considered an indicator of the global economy, has seen a more than 25% increase this year due to its significant role in the power and construction industries.
Operations at Grasberg, the world’s second-largest copper mine in Indonesia, were halted last month due to mudslides that inundated the site and resulted in seven worker fatalities.
This incident, among others, prompted a shift in analysts’ consensus, moving the 2025 market forecast from a surplus of 40,000 tons to a deficit of 124,000 tons in the latest poll.
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