Gold and Oil Rise as COVID Worries Continue to Surge

Gold rose in Asia early on Tuesday morning amid the recent surge in the COVID Delta variant.  The same virus concerns in several countries are also pushing the precious metal higher.

In a previous session, the safe haven gold fell to a one-week low of $1,794.06. By 1:05 PM ET (5:05 AM GMT), the yellow metal rebounded up 0.51% to $1,818.50. 

Moreover, silver eased 0.1%, while palladium held steady at $2,597.23. Platinum edged up 0.3% to $1,077.98.

Like gold, oil also rose on Tuesday morning in Asia. However, both Brent oil futures and WTI futures have remained below the $70 mark. Brent futures plunged to the most since March 2021, falling 6.8% to an eight-week low on Monday. Then, it rose 3.46% to $28.09 by 12:26 AM ET (4:26 AM GMT) and WTI futures climbed 3.92% to $24.95.

As the global Delta strain outbreaks continue to dim the fuel demand outlook, renewed lockdown measures are being put in place in some countries. The U.S government has restricted Americans from travelling to the U.K. where a resurge in the virus is ongoing. In Japan, virus cases also continue to swell ahead of the Tokyo Olympic Games on July 23.

Supply Concerns

As the oil industry is showing signs of a tight supply, crude inventories in the U.S. are expected to drop for a ninth week. Eugen Weinberg of Commerzbank said global demand still appears to be recovering dynamically. So the oil market should end up in a supply deficit in the coming months despite the production hikes to be implemented by OPEC+, he added. 

Stephen Brennock of oil broker PVM said, as things stand, it is hard to see prices staging a comeback unless virus jitters are brought back under control. 

The OPEC+, agreed on Sunday to increase output from August. The move  will ease more of the supply curbs put in place last year at the onset of the pandemic. 

The group expects world oil demand to grow by 6.6% in 2021. The expansion is focused on the second half of the year. 

Markets are awaiting the U.S. crude oil supply data from the American Petroleum Institute (API) due later in the day.

Meanwhile, global natural gas prices were edging up again on Monday. Prices were picking up from last Friday’s gains as supply issues were pushing them up. Hotter weather is also causing the rise in prices of the commodity.