Oil ETFs Surge as Sanctions Drive Price Rally, While Silver and Gold Correct

Are Precious Metals Losing Their Shine Amid Diplomatic Progress?

Markets turned risk-on last week as progress in U.S.–China trade negotiations lifted sentiment and sent investors unwinding safe-haven positions across gold, silver, and oil. The move came as Washington and Beijing reached a preliminary consensus on several contentious issues, export controls, agricultural purchases, and shipping levies, ahead of the Trump–Xi meeting scheduled for later this week in South Korea.

Gold, which had surged nearly 60% over the past year to an all-time high above $4,398 per ounce, fell more than 1% to around $4,040 on Monday. The pullback marked its steepest two-day drop since 2013, as traders locked in profits and margin requirements were raised on futures contracts. Despite the correction, gold remains up more than 50% year-to-date, supported by central bank buying and deep structural concerns over debt and inflation.

Silver followed the same path, slipping below $48 per ounce after tumbling over 6% last week. The decline came as physical shortages in London eased following a wave of new shipments from the U.S. and China. The London Metal Exchange reported that spot price premiums and short-term borrowing rates fell sharply, helping cool a rally that had lifted silver to record highs above $54 per ounce just days earlier.

Has the Fed Set the Stage for a Volatile Week?

The timing of this correction couldn’t be more crucial. The Federal Reserve is widely expected to cut rates by 25 basis points this week after softer-than-expected inflation data and a prolonged government shutdown that has disrupted key economic indicators. Chair Jerome Powell acknowledged that the Fed is “flying partially blind” but maintained that easing remains warranted to stabilize the labor market and sustain growth.

The backdrop of fiscal dysfunction — with the U.S. national debt surpassing $38 trillion — has kept long-term investors anchored in gold, even as short-term sentiment cools. Analysts have reiterated that the structural drivers remain intact, projecting gold to average $5,055 per ounce by late 2026 amid rising stagflation risks and concerns over the Fed’s independence.

Oil Feels the Weight of Sanctions

Oil prices climbed sharply last week, with WTI crude rising toward $61 per barrel as markets reacted to new U.S. sanctions on Rosneft and Lukoil, which together account for over half of Russia’s daily oil production. The move raised fears of tighter global supply and potential disruptions to Indian imports. New Delhi alone represents more than 20% of Russia’s hydrocarbon export revenues so far this year. The announcement spurred a risk bid across energy markets, lifting prices through the week despite ongoing uncertainty in global demand.

However, today, WTI stabilized, as traders took profits and recalibrated expectations following signs that the “American Quintet”, the U.S., Canada, Brazil, Guyana, and Argentina, could collectively offset potential Russian shortfalls. The International Energy Agency reaffirmed its view that the market remains in mild surplus, tempering the prior week’s rally even as geopolitical risks continue to underpin price volatility heading into the Trump–Xi summit later this week.

ETF Highlights

Among oil-linked products, the BNP Paribas WTI Oil (TR) ETC (BNQB) rose 7.7% over the week, while the BNP Paribas ICE Brent Oil ETC (BNQA) added 7.5%. Leveraged products such as the SG 3x Long WTI Oil Future ETC (WTI3L) also climbed more than 7%, extending gains from early October. On the hedged side, WisdomTree WTI Crude Oil (ECRD) advanced 6.7%, and WisdomTree Brent Crude Oil (EBRT) gained nearly 5%, underscoring strong investor interest in the oil rebound.

In contrast, precious metals ETFs retreated sharply as gold and silver prices corrected from record highs. Gold miners led the losses, with VanEck Gold Miners (GDX) and L&G Gold Mining (AUCO) each falling more than 7%, while silver products such as the iShares Physical Silver ETC (ISLN) slumped nearly 11%, reflecting heavy profit-taking after months of outsized gains.

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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.