Crude Oil, Gold Outlook: Peace Deals Favor Oil and Gold Bears

Key Events

• Ukraine agrees to a U.S. mineral deal as part of Russia-Ukraine negotiations
• U.S. consumer confidence drops to a 10-month low
• Oil falls below the $70 handle amid supply optimism and demand pessimism
• Gold retreats over 60 points from its record $2,955 high on peace deal sentiment

Oil Drops Below the $70 Handle on Supply Optimism and Economic Pessimism

U.S. consumer confidence fell to a 10-month low on Tuesday, registering 98.3, reinforcing concerns over economic instability amid tariff risks and inflationary pressures. Oil prices extended their losses, hitting a new 2025 low of $68.70 per barrel, bringing focus to the critical $64–$66 support zone, which could either validate long-term bearish forecasts or signal an extended trading range.

Beyond macroeconomic concerns, geopolitical shifts are also influencing oil prices. The latest Russia-U.S.-Ukraine peace deal is on track to lift Russian sanctions, including restrictions on oil exports, potentially easing global supply constraints. This development replaces shadow fleet dependencies with a more stable oil supply chain, reducing the upside hedging risks that previously supported crude prices.

Additionally, the sentiment aligns with former President Trump’s energy policy, which emphasizes oversupplying the market to drive down oil prices. If sustained, this outlook could further solidify bearish oil forecasts for 2025.

Gold Retreats Over 60 Points from its Record $2,955 High

With peace deals dominating headlines, gold recently tested a key resistance zone between $2,940–$2,955, an area it has struggled to break above multiple times in February. Given that the 3-day RSI hovered near overbought levels, last seen in November before gold plummeted 250 points post-U.S. elections, the risk of a sharp retracement was already elevated.

Yesterday, gold retreated from its $2,955 high to a low of $2,888, marking a 67-point drop and reinforcing bearish sentiment at these record levels. This decline dampens short-term expectations for a $3,000 test, at least until momentum recharges. However, if geopolitical tensions and inflation fears escalate, a sustained breakout above $2,955 could open the door for another leg higher.

Technical Analysis: Quantifying Uncertainties

Crude Oil Outlook: 3-Day Time Frame – Log Scale

Source: Tradingview

Oil’s break below $70 saw a quick retest of the $68.70 support level, leaving the $66–$64 zone in focus for potential further declines. Key resistance remains between $73, $76, and $78, which could cap any recovery attempts.

From the downside perspective, a clean close below $64 would significantly weaken oil’s structure, potentially sending it toward the $60 psychological level. Below that, the $55 mark aligns with the 0.618 Fibonacci retracement of the 2020–2022 uptrend, while an extreme downside scenario could see prices drop to $49.

Gold Outlook: 3-Day Time Frame – Log Scale

Source: Tradingview

Gold is currently forming a bearish engulfing pattern, though confirmation is still pending. However, the latest selloff from the $2,955 high signals increasing downside risks. For now, a sustained close above $2,955 is required to maintain a bullish outlook.

Otherwise, retracement levels to watch include $2,840, $2,790, $2,730, and $2,690, where momentum may stabilize before resuming gold’s broader uptrend. However, a drop below $2,690 could shift long-term projections, reinforcing a deeper bearish outlook for gold.

Written by Razan Hilal, CMT

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