West Texas Intermediate crude fell nearly 13% last week, while the front-month COMEX gold futures contract gained 4.6%. After Democrats won the U.S. midterm elections, investors anticipated an easing of tensions between Washington and Tehran. Those expectations weighed on crude prices, and cheaper oil eased inflation concerns, helping lift gold.

WTI drops nearly 13% on the week

The biggest move came Wednesday, when oil prices fell about 8% after the election results were announced. Prices recovered some of those losses late in the week as renewed attacks on tankers in the Persian Gulf and the Strait of Hormuz raised concerns about supply disruptions.

WTI was quoted at about $90.50 a barrel on Nov. 9, while Brent was near $97.50, according to Trading Economics. Even after the weekly decline, WTI was still about 50% above its year-earlier level.

Gold ends the week higher

Front-month COMEX gold futures ended the week at $4,064.50 per troy ounce. The contract fell 0.9% on Friday after a stronger-than-expected U.S. jobs report lifted the dollar and pushed up the yield on the 10-year Treasury note. Higher bond yields make gold less attractive because it pays no interest.

Markets look to Iran talks and the Fed

The security of oil shipments through the Strait of Hormuz remains a key concern. If talks stall or attacks on tankers intensify, the risk of supply disruptions could push oil prices higher again.

For gold, the next test is the October U.S. Consumer Price Index, due November 10. Nonfarm payrolls rose by 165,000 in October, compared with a forecast of 59,000, and the unemployment rate fell to 4.1%. After the jobs report came out on November 6, markets priced in about a 78% chance that the Federal Reserve would raise rates by a quarter percentage point at its December 8–9 meeting. A hotter-than-expected inflation reading could increase the odds of a rate hike and weigh on gold.

What this means for oil exporters

For Kazakhstan and Azerbaijan, a sustained decline in oil prices could cut export earnings and reduce government revenue. The impact will depend on how long prices stay lower and what price each country gets for its crude.