Why are oil prices rising again? US crude and Brent November futures witness spike

Oil prices are witnessing a spike again on Wednesday. US-Iran peace talks have been stalled while US fuel markets tightened. US crude climbed 2.2% to $91.33 a barrel while Brent November futures jumped 1% at $103.71. Brent crude is heading for its biggest monthly gain since July. The Dow Jones Industrial Average scaled 30.02 points to 51,379.94, the S&P 500 jumped 45.83 points, or 0.6%, to 7,716.67 and the Nasdaq Composite rose 273.34 points, or 1%, to 27,071.20.

Bullion prices also

Spot gold is up by 0.2% to reach $4,188.17 an ounce, as of 0920 GMT. US gold futures also jumped 1% to $4,219.90. Spot silver has dropped 0.8% to $60.98. Platinum has gained 0.5% to reach $1,714.71 while palladium has nosedived 0.2% to $1,220.98. All the precious metals are set to register declines this month.

The dollar, which is lower on the day, is still on track for a monthly gain. A stronger dollar makes gold more costlier for holders of other currencies. Gold is also reeling under pressure this month due to the expectations of another rise in US interest rates. Giovanni Staunovo, analyst, UBS, said, "Higher oil prices and the increased probability of further US rate hikes being priced in by market participants are the main drivers behind gold's recent weakness."

Fed rate hike expectations trouble bullion prices

As gold does not offer investors a yield, higher interest rates make the metal less attractive than other assets. “Gold is very sensitive to expectations around Fed hikes and statements from officials,” said Jamie Dutta, market analyst, Nemo.money.

Traders are currently expecting a 45% chance of a rate hike in October and an 89% chance of one in December, as per the CME FedWatch Tool. Investors are now looking forward to the release of the personal consumption expenditures (PCE) price index later today at 1230 GMT.