Oil falls 7.5% on peace hopes, gold up

US-Iran talks rattle crude; bullion gains Rs2,400/tola; rupee inches up

KARACHI:

Oil prices fell more than 7% on Monday as talks between Iranian and Qatari officials lifted hopes for an end to the US-Israel war with Iran and stabilisation of Middle East crude supply.

Iran's president said the supreme leader had granted the government "certain authorities" regarding peace talks. The country's negotiators held days of talks with Qatari mediators aimed at ending the war. A draft proposal is being circulated, with a follow-up meeting possible, an official briefed on the talks said.

Brent crude futures fell $8.47, or 7.47%, to $104.96 a barrel by 1724 GMT, as per Reuters. US West Texas Intermediate (WTI) crude was down $7.50, or 7.2%, at $96.62. The session low for Brent was $104.49 and for WTI, it was $96.44, with analysts citing hopes for a diplomatic breakthrough.

Signs of progress in US-Iran talks pushed oil prices lower, Raymond James' analyst Pavel Molchanov said, noting, however, that scepticism was warranted after many "false dawns" over the past several months.

Meanwhile, gold prices in Pakistan rebounded on Monday, gaining Rs2,400 per tola to Rs412,136, tracking recovery in the international market, as easing oil prices helped temper inflation concerns. In the international market, spot gold rose 2.1% to $3,957.19 per ounce by 1411 GMT, recovering from a one-year low hit in the previous session. US gold futures for December delivery advanced 1.77% to $3,967.40.

According to rates released by the All-Pakistan Gems and Jewellers Sarafa Association, the price of 10-gram gold increased Rs2,058 to Rs353,340. On Saturday, gold had plunged Rs10,800 per tola to Rs409,736, reflecting a sharp decline in international bullion rates.

The international recovery came as oil prices fell more than 7% on Monday following a third consecutive day of talks between Iranian and Qatari officials aimed at ending the US-Israel war with Iran. Lower oil prices eased concerns about inflationary pressures, providing some support to precious metals.

Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, noted that markets were still anticipating a US Federal Reserve rate hike in December, although expectations had eased slightly. Traders were pricing in a 77% probability of a rate hike, down from 80% a week earlier, according to CME Group's FedWatch Tool.

Furthermore, the Pakistani rupee appreciated Rs0.03 against the US dollar to close at Rs276.72 in the inter-bank market, extending its marginal gains.