Oil prices are expected to remain elevated and volatile as persistent supply risks in the Middle East, particularly disruptions to shipments through the Strait of Hormuz, continue to unsettle global energy markets.
Market attention is shifting to the upcoming OPEC+ meeting, where production targets are expected to remain unchanged, as well as developments from the ADIPEC conference and Saudi Aramco’s December official selling prices.
Richard Nsubuga, the head of trading in the Corporate and Investment Banking (CIB) Markets division at Absa Bank Uganda, said geopolitical developments would remain the main driver of short-term oil price movements, despite broader regional exports showing resilience.
Oil flows through the Strait of Hormuz, a critical route for global energy supplies, remain significantly below pre-conflict levels, sustaining a risk premium in crude prices.
The outlook is further complicated by restrictive monetary policies maintained by the United States Federal Reserve and the European Central Bank, which could weigh on global demand expectations.
However, renewed supply disruptions remain the biggest upside risk to prices, as traders continue to assess the impact of Middle East tensions on global energy supplies.
Gold loses ground
Meanwhile, gold prices declined during the week as a stronger US dollar, elevated real yields and expectations of tighter monetary policy reduced the appeal of the precious metal.
Gold fell by approximately 0.3 per cent to $3,998 per ounce, having briefly reached $4,058.80 on Tuesday.
The decline followed the Federal Reserve’s hawkish decision to maintain its interest rate range at 3.75 per cent to four per cent. Two policymakers reportedly favoured an immediate rate increase, while the possibility of another increase in December remained under consideration.
The stronger dollar and rising real yields made gold, which does not pay interest, less attractive to investors. Emerging outflows from gold-backed exchange-traded funds also added pressure.
Bullion subsequently slipped below the psychologically important $4,000 mark, leaving it about 28 per cent below its January peak.
Despite the decline, gold performed better than the broader commodity market, which recorded a weekly fall of 1.6 per cent.
However, the metal’s failure to attract significant safe-haven demand during Friday’s equity-market sell-off highlighted the continued influence of interest-rate expectations on its performance.
Nsubuga said the near-term direction of gold would depend on upcoming US inflation data, movements in the dollar following the November 3 midterm elections and expectations ahead of the Federal Reserve’s December meeting.
Some investors anticipate a recovery towards $4,500 per ounce as market positioning becomes lighter. However, the prospect of further monetary tightening and sustained dollar strength could limit any recovery.
Sterling outperforms the euro
In the foreign exchange market, the euro and the British pound recorded mixed performances against the US dollar, reflecting differences in monetary policy expectations and economic conditions.
The euro weakened by 0.20 per cent to $1.1180, while sterling gained 0.14 per cent to $1.3393.
The euro remained under pressure after the European Central Bank maintained its deposit rate at 2.50 per cent. Uncertainty surrounding leadership developments at the bank, persistent French fiscal concerns and bearish market positioning also weighed on the single currency.
A resilient US dollar, supported by elevated interest rates and stronger inflation data, added to the pressure.
The euro’s weakness was also reflected in its exchange rate against sterling. The EUR/GBP pair fell to 0.8354, its lowest level since April 2025, indicating the pound’s relative outperformance.
Sterling gained support from a UK Budget that emphasised fiscal restraint and household support while avoiding broad tax increases. The announcement also helped support UK government bonds and equities.
Expectations that the Bank of England would raise its benchmark interest rate by 25 basis points to four per cent on November 5, alongside resilient labour-market data, provided further support to the pound.
However, Britain’s public debt, which has exceeded £3 trillion, remains a medium-term concern.
Looking ahead, the Bank of England’s interest-rate decision is expected to be the main driver of sterling, while the euro will remain sensitive to developments in French public finances, guidance from the European Central Bank on a possible December rate increase and movements in US Treasury yields.
Nsubuga said currency movements would continue to reflect changing expectations about interest rates, economic data and policy decisions in major economies.
Richard Nsubuga is the head of trading, Corporate and Investment Banking Markets, Absa Bank Uganda.
