WTI crude fell 1.2% to $78.50, gold slipped 0.5% to $2,340 as risk appetite returned. Canada's May jobs report Friday is the next catalyst for rate-cut bets, with economists expecting 22,000 jobs added.
European and U.S. equities rose this week. The Stoxx 600 in Europe climbed, and the S&P 500 closed at a fresh record high. Middle East tensions eased. A rally in semiconductor stocks gave the index its lift. WTI crude fell 1.2% to $78.50 a barrel, its lowest level in three weeks. Gold slipped 0.5% to $2,340 an ounce. Traders said the moves reflected a rotation out of safe-haven assets into riskier ones.
Ceasefire talks resumed in Cairo, reducing the supply-risk premium that had pushed oil above $82 earlier this month. The talks are the first in weeks and aim to secure a temporary truce. Nvidia gained 4.3% on Tuesday, pushing its market cap above $3 trillion and reigniting the AI trade. The risk-on mood extended to Asia, where the Nikkei 225 rose in Tokyo trading, tracking the U.S. rally.
The S&P 500's record close was its second this month. The Nasdaq 100 also rose, with chipmakers outperforming. The rally extended across sectors, though energy stocks lagged as oil fell.
Gold slipped 0.5% to $2,340. The decline reflected a fading safe-haven bid, traders said. The metal had rallied to $2,400 earlier in June on safe-haven buying and expectations of Federal Reserve rate cuts. Those expectations have not vanished. The immediate fear premium is unwinding, traders said. Gold's safe-haven appeal had been boosted by the Gaza conflict and the risk of a wider regional war. Traders said those risks receded after the ceasefire talks resumed, removing a key support. The metal's next move will depend on the jobs data and the Fed meeting.
The next catalyst for gold and currencies is Canada's May employment report due Friday. Economists expect the economy to have added 22,000 jobs, with the unemployment rate holding at 6.1%. The labor market is a key input for the Bank of Canada's rate decision. Traders said a strong print would reduce the odds of a July rate cut, potentially lifting the Canadian dollar and pressuring gold. The Canadian dollar weakened against the U.S. dollar this week.
For oil, the Canada jobs number matters less than the broader demand picture. WTI has already priced out the Middle East risk premium, traders said. The next catalyst is the weekly U.S. inventory report due Wednesday, followed by the Federal Reserve's June meeting decision on June 12. A hawkish hold from the Fed would strengthen the dollar and cap oil's upside, traders said. Traders said a drawdown in crude stockpiles would support prices, while a build could add to the bearish pressure.
The chip rally that drove the risk-on move has its own risks. Nvidia's 4.3% gain pushed its market cap above $3 trillion. The stock now trades at 45 times forward earnings. The momentum remains strong as long as AI spending holds up, traders said. The S&P 500's gains this year have been driven by a handful of technology stocks, including Nvidia. Concentration risk is a concern, some analysts said.
The U.S. inventory report is due Wednesday, followed by the Fed's June 12 meeting. Canada's jobs report arrives Friday.
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