Global commodity markets are sending conflicting signals this Friday, with oil prices holding above $100 a barrel following the worst supply disruption in the history of the global energy trade, while gold, despite sitting near record territory, is pulling back as a resurgent dollar and inflation fears weigh on bullion demand.
Brent crude was priced at $99.84 per barrel as of early morning trading in New York on Friday, roughly $29.47 higher than it stood one year ago. The benchmark hit a high of $119.50 in the past month and is trading Friday within a range of $98.47 to $102.73.
The International Energy Agency (IEA) described the current crisis as the largest supply disruption in the history of the global oil market, with crude and product flows through the Strait of Hormuz plunging from roughly 20 million barrels per day before the conflict to a trickle, after United States and Israeli forces launched joint air strikes on Iran on February 28. Gulf countries have responded by cutting total oil production by at least 10 million barrels per day, while producers outside the Organisation of the Petroleum Exporting Countries and its allies have ramped up output to partially offset the losses.
Gold, meanwhile, is retreating despite the crisis. The metal stood at $5,114 per ounce as of early Friday trading in New York, a decline of $67 from the previous session and more than $2,130 above where it traded one year ago. Gold reached a peak above $5,400 in late February at the height of initial conflict fears before pulling back sharply.
The pressure is coming from a strengthening US dollar, with the Dollar Index up roughly 1% over the past five days and 3.3% over the past month, as surging oil prices are stoking fresh inflation concerns and reducing the likelihood of near-term Federal Reserve rate cuts. Since the United States exports more oil than it imports, rising crude prices tend to strengthen the greenback, which in turn makes dollar-denominated gold more expensive for buyers using other currencies.
Market participants had earlier expected the Fed to cut interest rates twice in 2026, but those reductions are now unlikely if a new inflationary trend takes hold, and the probability of a March rate cut currently stands at just 4.4%. Elevated yields on US Treasury bonds continue to pull capital toward interest-bearing instruments, reducing the appeal of gold which pays no income.
Year-end gold price targets from major financial institutions range between $5,190 and $6,300 per ounce, with central bank buying, fiscal deficit concerns, and reserve de-dollarisation cited as the core structural supports underpinning the longer-term outlook.
For oil-importing economies, the combination of triple-digit crude prices and a stronger dollar is compressing purchasing power and pushing up the landed cost of goods. The IEA also noted that the suspension of flights at major Middle East airports and disruptions to liquefied petroleum gas and naphtha supplies are already forcing petrochemical plants to curb output, with broader demand for oil products beginning to erode as higher prices weigh on economic activity globally.
