Commodity wrap: Brent falls post $106/bbl; gold dips on reduced rate cut bets

Gold prices continued their slide on Monday with the yellow metal briefly falling below $5,000 per ounce due to reduced rate cut bets from the US Federal Reserve. 

Silver prices on COMEX also fell below $80 per ounce on Monday as concerns about rising inflation due to high crude oil prices weighed on sentiments. 

The COMEX silver contract was last at $80.480 an ounce, down 1.3%.

Meanwhile, Brent crude oil hit more than $106 per barrel as geopolitical tensions simmered in the Middle East, and the supply disruptions remained at the forefront. 

However, prices dipped at the time of writing, with West Texas Intermediate (WTI ) crude falling by more than 2% after the US President Donald Trump called for global efforts to secure the Strait of Hormuz. 

Among base metals, aluminium prices reversed early gains and were at $3,404.65 per ton, down 0.5% on the London Metal Exchange.

The three-month copper contract was down $12,846 per ton, up 0.7%.

Gold dips 

The appeal of non-yielding gold was dampened on Monday, as the precious metal's prices fell. 

This decline was driven by worries that soaring oil costs might accelerate inflation, potentially leading major central banks, such as the US Federal Reserve, to adopt a more hawkish policy stance.

Market pressure continues due to increasing oil prices, a situation made worse by the US strike on Iran's Kharg Island oil terminal, a major export hub for the country.

The escalating cost of energy is fueling inflation concerns, which, in turn, lessens the probability of near-term monetary policy loosening.

This environment puts downward pressure on gold, as higher interest rates make non-yielding assets less attractive.

Attention this week will be on central banks around the world, starting with the Federal Reserve, which is widely anticipated to keep its interest rate steady. 

Key monetary policy decisions are also expected from central banks in the Eurozone, the UK, Japan, Switzerland, Australia, Canada, China, Brazil, and Russia.

Markets remain volatile as the military conflict in the Middle East enters its third week with no signs of de-escalation. 

The immediate outlook for gold appears weak, driven by technical indicators suggesting further declines, and in anticipation of the Federal Reserve's expected decision to keep interest rates unchanged this week.

“However, the upside for the precious metal remains capped by the realization that elevated energy prices may force the Federal Reserve to delay interest rate cuts, a sentiment reflected in the 0.6% dip of US gold futures for April delivery,” Zain Vawda, market analyst at MarketPulse said in a note. 

The COMEX gold contract was at $5,020.30 per ounce, down 0.8%, and had fallen to a session’s low of $4,971.30 an ounce earlier on Monday. 

Oil dips, but tensions remain high

Amid attacks on Gulf oil production and US President Donald Trump's urging for global collaboration to secure the Strait of Hormuz, oil prices saw mixed results on Monday.

Benchmark Brent crude had edged higher above $106 earlier in the day before falling over 1%, while US crude prices declined more than 3%.

On Sunday, Trump demanded that other countries assist in protecting the critical energy route, stating that Washington was discussing with several nations how to police the strait.

Meanwhile, on Monday, British Prime Minister Keir Starmer said that Britain is collaborating with allies on a joint plan to re-open the Strait of Hormuz and re-establish freedom of navigation in the Middle East, acknowledging that it would be a difficult endeavor.

Trump also mentioned that the US is in contact with Iran; however, he expressed skepticism that Tehran was ready for serious negotiations to resolve the conflict.

At the time of writing, Brent crude oil was at $102 per barrel, down 1.2%, while WTI was 3% lower at $93.93 a barrel. 

The two contracts have seen a surge of over 40% this month, reaching their highest levels since 2022. 

This spike followed Iran's decision to stop shipping through the Strait of Hormuz—a crucial waterway for 20% of the world's oil and LNG—in response to attacks on Iran by the US and Israel.

Oil loading operations at the UAE's port of Fujairah have resumed, according to a Reuters report.

The halt followed a drone attack that caused a fire in the emirate's petroleum industrial zone earlier.

Fujairah is a key outlet for the UAE's Murban crude, handling about 1 million barrels per day—roughly 1% of global demand—and is located outside the Strait of Hormuz.

The International Energy Agency (IEA) stated on Thursday that the ongoing war in the Middle East is causing the largest oil supply disruption in history, coinciding with production cuts by major producers, including the UAE, Saudi Arabia, and Iraq.