Rising US dollar and Treasury yields weigh on gold prices; traders focus on Federal Reserve minutes

The cost of renting very large crude carriers (VLCCs) to transport crude oil has surged to record highs, adding substantial expenses to the oil supply chain. According to data from the London Baltic Exchange on Wednesday, the cost of chartering a VLCC to deliver US crude oil to Asia is $77 million. The average level for 2025 is forecasted at $9.2 million. Although the main crude oil futures prices are currently trading around $100 per barrel, these futures are typically based on the grade of crude oil at the export location. For a cargo of 2 million barrels, freight charges mean an additional delivery cost of about $38.50 per barrel. In some markets, such as West Africa, exporters are forced to discount their cargoes at the export location. The Iran war has caused disruption in the tanker market, reshaping the way oil is shipped from the Middle East and significantly increasing transportation times. Although crude flows from the region have rebounded in recent weeks, trading routes are far more complicated than before the Iran war, resulting in longer delivery times and a substantial reduction in the effective capacity of the fleet.

Morgan Stanley strategists have renewed their recommendation to short EUR/CHF, betting that rising risk aversion and increasing risk premiums on eurozone assets will drag down the euro. In a report published Wednesday, the strategists wrote that shorting EUR/CHF could hedge against "further increases in fiscal and political risk premiums," and that bond market volatility may prompt markets to reprice European Central Bank policy expectations in a more dovish direction. They noted that concerns from the Swiss National Bank over Swiss franc appreciation pose a risk to the EUR/CHF short, potentially driving the pair higher. The strategists target EUR/CHF at 0.90 with a stop-loss at 0.96. They also continue to recommend shorting EUR/AUD and expect the euro to weaken against most currencies.