Commodities Pressure: Oil Slips on Oversupply, Gold Retreats Despite Asian Buying Frenzy

The commodities complex ended the week on the back foot, trapped between bearish supply fundamentals and a resurgent US Dollar. Despite lingering geopolitical tensions involving Iran and Russia, market participants are prioritizing inventory data over war premiums.

Crude Oil: Validating the Oversupply Narrative

WTI Crude slumped to near $64.00 per barrel, erasing recent gains.

• The Bear Case: The market is saturated. Non-OPEC+ production continues to rise, and demand signals from China remain tepid.
• Geopolitics Ignored: Even news that Lukoil is forced to sell $22 billion in international assets to Carlyle Group—a massive restructuring of energy ownership due to sanctions—failed to bid prices higher. The market interprets this as a transfer of ownership rather than a supply disruption, leaving the physical glut as the primary price driver.

Gold: A Tactical Correction?

Spot Gold (XAU/USD) plunged nearly 4%, falling toward the $2,580 region (implied by Asian price action).

• The Trigger: The “Warsh Rumor” (see Article 1) spiked real yields, making non-yielding assets less attractive.
• The Asia Divergence: The sell-off contrasts sharply with physical demand. Data shows record inflows into AsianGold ETFs in January (e.g., China's Huaan Yifu Gold ETF added $1.9bn).
• RSI Warning: Analysts had warned that Golds RSI was nearing 90—an extreme overbought signal. The current drop serves as a technical washout of “late longs.”

Outlook

While the long-term bullish case for Gold (central bank buying, debasement fears) remains intact, the short-term correlation with US real yields has reasserted itself. Traders should watch the $2,550 support level closely.