Gold is at record highs, Oil is dropping sharply and Natural Gas is following its usual cycles

Gold, Oil and Natural Gas: three completely different situations, yet in practice they say a great deal about the current condition of the global economy.

prepared by David Pascucci, market analyst for XTB

Trade tariffs certainly affect inflation dynamics on a global scale, especially in the West, while geopolitical tensions do not appear to be having much impact on the current market situation.

OIL - A steadily downward trend for oil, which in fact continues its slide toward the lows and has recently fallen below $60 a barrel. Even in the presence of inflation rising globally and constant geopolitical tensions since 2022, oil does not seem able to turn around. The only macroeconomic reason can be traced back to a decline in global demand, which in practice is preventing oil from seeing any significant price increases except on a technical basis. The slowdown in China, a country grappling with very dangerous deflation, is certainly pushing oil prices down. In short, deflation in China leads to lower oil. Looking at performance, from this year's highs oil is down 30% in dollars and -37% in euros, an ideal condition for those who need this raw material and a likely brake on any future rise in inflation in the long term.

GOLD - An incredible rally in gold, which at the moment shows no obvious signs of slowing. The rise is driven mainly by its very nature, namely that of hedging inflation with its returns, inflation that on a global scale is still relatively high. From a technical standpoint, the current situation is risky because we now have 9 consecutive weeks of gains with a performance of more than 25%, a move that started from levels that were already all-time highs from the outset, so the risk of very sharp pullbacks within the daily trading window is very high. For the moment, the situation remains this way until we see significant changes on the inflation front, or in overall market risk. Caution: should we see a decline in equity markets, do not take it for granted that gold prices will rise, as the correlation is not that straightforward.

NATURAL GAS - Gas does not seem to be affected at all by the dynamics of macroeconomic data or the economy in general. Gas is a typically sideways and cyclical commodity; its prices move within price bands that are usually traded mainly by specialised operators who use gas derivatives as a risk hedge, making it an asset that is therefore not very speculative by nature. Natural gas is showing a slightly bearish trend, in line with what we are seeing in oil, another major energy raw material. However, gas moves are broader, and we must consider that from the April highs to the July lows we saw a decline of about -47%. For now the trend remains bearish, although prices are still higher than at the end of 2024.