Oil prices were trading near seven-month highs on Tuesday as traders assessed supply risks stemming from any potential military escalation, while a new round of nuclear talks between the United States and Iran approached.

Brent crude futures were steady at $71.49 per barrel at 10:37 GMT, while US crude futures rose by 11 cents, or 0.2%, to $66.42 per barrel.

Brent is trading at its highest levels since late July, while West Texas Intermediate is holding at its strongest levels since early August.

Iran and the United States are scheduled to hold a third round of nuclear talks on Thursday in Geneva, according to Omani Foreign Minister Badr Albusaidi on Sunday.

The United States is seeking to push Iran to abandon its nuclear program, but Tehran has firmly rejected that demand and denied pursuing a nuclear weapon.

In a related development, a senior US State Department official said on Monday that the department is withdrawing non-essential government personnel and their families from the US embassy in Beirut amid rising concerns over the risk of a military conflict with Iran.

US President Donald Trump said in a social media post on Monday that it would be “a very bad day” for Iran if it failed to reach an agreement.

Analysts at SEB said in a research note: “The risk is not necessarily that war is the base-case scenario, but that escalation may become difficult to contain once positioning and expectations rise.”

They added: “This is the concerning dynamic currently supporting the geopolitical premium in oil prices.”

On the trade policy front, Trump warned countries on Monday against walking away from recently negotiated trade agreements with the United States after the Supreme Court struck down his emergency tariffs, indicating that he would impose significantly higher duties under different trade laws.

Trump said on Saturday that he plans to raise temporary tariffs on US imports from all countries to 15% from 10%, which is the maximum level permitted under the law.

The dollar fell in Tuesday trading as Asian markets reopened, while investors assessed a highly uncertain trade environment. The Japanese yen, meanwhile, came under pressure following reports about a potential political intervention. 

Pressure on the yen after reports on the prime minister’s stance

The yen declined by 0.83% to 155.93 per dollar, hitting its lowest level in nearly two weeks, after a report by the Mainichi Daily said that Japanese Prime Minister Sanae Takaichi told Bank of Japan Governor Kazuo Ueda last week that she had reservations about moving ahead with further interest rate hikes.

The report also pushed Japanese government bond yields lower, adding complexity to Japan’s political and monetary landscape at a time when the central bank is struggling with currency weakness that has raised fuel and food import costs for Japanese households.

Before the report, most economists surveyed by Reuters had expected interest rates to rise to 1% by the end of June, while markets had priced in around a 70% chance of a rate hike by April.

Kenneth Broux, Head of Corporate Research and FX and Rates at Societe Generale, said: “This development tests the view that the yen had started to recover.” He added, “If the government is pressuring the central bank, doubts about its independence will return.”

Takaichi told parliament that a weaker currency has both positive and negative effects.

Chinese export restrictions affecting Japanese companies also added pressure to the currency, with the yen falling 0.8% to 183.75 against the euro.

Potential US intervention to support the Japanese currency

The yen has also remained under the watch of US authorities. Nikkei reported that the Federal Reserve Bank of New York, acting on behalf of the US Treasury Department, carried out what are known as “rate checks” last month to support the Japanese currency without a formal request from Tokyo.

Broux said this suggests that Japan is not overly concerned about the yen, despite verbal interventions aimed at slowing its decline.

Unstable trade environment

These developments come as investors face continued trade uncertainty.

The Supreme Court of the United States ruled on Friday that President Donald Trump’s use of the 1977 emergency law to impose tariffs exceeded his authority. However, Trump invoked a different law and imposed new tariffs on all imports just hours later.

An initial 10% tariff took effect one minute after midnight Tuesday, according to a customs notice, while the timing of Trump’s proposed increase to 15% remains unclear. So far, the president has signed an executive order covering only the 10% rate.

Trump also warned countries against backing away from recent trade agreements following the Supreme Court’s decision to strike down the emergency tariffs.

Ray Attrill, Head of FX Strategy at National Australia Bank, said in the bank’s podcast: “We are now back in a highly uncertain environment.”

He added that uncertainty surrounds the future shape of global trade at a time when many countries had already signed agreements or were close to doing so.

Additional concerns: artificial intelligence and geopolitical tensions

These developments coincide with rising market skepticism about the sustainability of heavy investment in artificial intelligence, alongside concerns among Federal Reserve policymakers over persistently elevated inflation.

Traders are also monitoring rising geopolitical tensions, after the US State Department announced the withdrawal of non-essential government personnel and their families from the US embassy in Beirut amid growing fears of a possible military conflict with Iran.

Major currency performance

The euro remained steady at $1.1785.

The British pound was little changed at $1.3487.

The European Parliament decided on Monday to delay a vote on the trade agreement between the European Union and the United States because of the new import tariff.

Meanwhile, the Chinese yuan reached its highest level against the dollar in nearly three years, supported by expectations that the new tariff system could lead to reduced taxes on Chinese exports.

Gold prices declined in European trading on Tuesday for the first time in the past five sessions, retreating from a four-week high recorded earlier during Asian trading, as corrective selling and profit-taking activity emerged alongside pressure from a stronger US dollar.

With expectations for a Federal Reserve interest rate cut in March fading, markets are awaiting further evidence regarding the path of US monetary policy throughout this year.

Price Overview

Gold prices today: gold fell by 1.6% to $5,145.37, down from the opening level of $5,227.80, after reaching a session high of $5,249.88 — the highest level since January 30.

At Monday’s settlement, gold prices rose by 2.4%, marking a fourth consecutive daily gain, supported by Trump’s tariffs.

US dollar

The dollar index rose by 0.2% on Tuesday, resuming gains that had paused over the previous two sessions, reflecting renewed strength in the US currency against a basket of major and secondary currencies.

As is well known, a stronger US dollar makes gold bullion priced in dollars less attractive to buyers holding other currencies.

The rise comes as investors assess the implications of renewed disruptions linked to the tariff system imposed by US President Donald Trump on global trade.

US President Donald Trump warned countries on Monday against abandoning recently negotiated trade agreements with the United States after the Supreme Court canceled his emergency tariffs, saying that if they did so, he would impose significantly higher tariffs under other trade laws.

US interest rates

Federal Reserve Governor Christopher Waller said he is open to keeping interest rates unchanged at the March meeting if February employment data indicates that the labor market has “stabilized” after weak performance in 2025.

According to the CME Group FedWatch tool, pricing for keeping US interest rates unchanged at the March meeting remains steady at 95%, while the probability of a 25 basis point rate cut stands at 5%.

To reassess these expectations, investors are closely monitoring upcoming US economic data releases, in addition to comments from Federal Reserve officials.

Gold outlook

Market strategist Ilya Spivak said that gold prices saw a notable surge yesterday, and that the market is now experiencing a period of relative stabilization, adding that it is noteworthy that the panic seen on Wall Street has not spread to Asian markets.

Spivak added that the rise in the US dollar and profit-taking by investors were the main reasons behind the decline in gold prices.

SPDR Gold Trust

Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased by 7.72 metric tons on Monday, bringing total holdings to 1,086.47 metric tons, the highest level since January 30.

The euro declined in European trading on Tuesday against a basket of global currencies, resuming losses that had paused over the previous two sessions against the US dollar, and moving closer again to a four-week low. The decline comes amid unsettled global market conditions driven by Donald Trump’s latest tariff measures.

Expectations for at least one European interest rate cut this year have strengthened, especially as inflationary pressures on policymakers at the European Central Bank continue to ease. Investors are awaiting further key economic data from Europe to reassess those expectations.

Price Overview

The euro exchange rate today: the euro fell against the dollar by about 0.15% to $1.1768, down from the opening level of $1.1785, while recording a session high of $1.1796.

The euro ended Monday’s trading up by around 0.1% against the dollar, marking a second consecutive daily gain, as recovery continued from a four-week low of $1.1742.

US dollar

The dollar index rose by 0.2% on Tuesday, resuming gains that had paused over the previous two sessions, reflecting renewed strength in the US currency against a basket of major and secondary currencies.

The rise comes as investors assess the implications of renewed disruptions related to the tariff system imposed by US President Donald Trump on global trade.

Trump announced on Saturday that temporary tariffs on US imports from all countries would be raised from 10% to 15%, in a rapid response to the historic US Supreme Court ruling on Friday that determined Trump’s broad tariffs exceeded his authority.

The Wall Street Journal reported that the Trump administration is considering imposing new national-security-related tariffs on industries including large-scale batteries, cast iron and fittings, plastic pipes, industrial chemicals, and power and communications network equipment.

European Parliament

The European Parliament decided on Monday to delay a vote on a trade agreement with the United States in response to what it described as “tariff chaos” created by President Donald Trump’s recent decisions.

Some European lawmakers described the current agreement as favoring the United States, arguing that US products would gain zero-tariff access to European markets while Europe would still face tariffs of up to 15%, increasing pressure to suspend ratification.

European interest rates

Data released recently in Europe showed a decline in headline inflation levels during December, indicating easing inflationary pressures on the European Central Bank.

Following those figures, money markets increased pricing for a 25 basis point interest rate cut by the European Central Bank at its March meeting from 10% to 25%.

Traders also adjusted their expectations from keeping interest rates unchanged throughout the year to anticipating at least one 25 basis point cut.

To reassess these expectations, investors are awaiting additional eurozone economic data on inflation, unemployment, and wage levels.