Commodity wrap: gold, silver, and oil prices retreat as investors book profits

Gold and silver prices fell on Tuesday as investors booked profits after a surge in the precious metals in the previous sessions. 

Oil prices eased slightly as concerns over oversupply intensified. Investors also booked profits after prices had hit a near two-week high on Monday. 

Base metals were largely flat from their previous close, with copper prices easing after hitting a record high on Monday. 

Bullion eases

On Tuesday, gold experienced a 1% decline, primarily driven by ascending US Treasury yields and a wave of profit-taking after the metal had reached a six-week peak in the preceding session. 

Concurrently, silver retreated from the record high it achieved on the previous day. 

The US dollar saw a rebound after having dropped to a two-week low in the previous session. 

Concurrently, benchmark 10-year US Treasury yields reached a nearly two-week high, influenced by weakness in Japanese and European government bonds. 

This upward movement in yields made non-yielding assets, like gold bullion, less appealing.

Market focus is now shifting to upcoming economic reports for further indications on the Federal Reserve's potential interest rate decisions at its meeting next week. 

These key reports include Wednesday's November ADP employment data and Friday's delayed September PCE Index. 

This comes after Monday's data confirmed that US manufacturing has been contracting for the ninth consecutive month in November.

According to CME's FedWatch tool, traders are currently pricing in a high probability—specifically an 87% chance—of the Fed implementing a rate cut in December.

“The daily MACD remains subdued, but above neutral. Traders will be keeping a close eye on $4,200 to see if there’s a significant break in either direction,” said David Morrison, senior market analyst at Trade Nation. 

Silver and base metals

Morrison said:

Silver stabilised at approximately $50 per ounce around the middle of last month before surging to a new all-time high of $58.84 on Monday.

After a weekly gain of 18%, the price dropped sharply this morning, pulling back toward $56.50. However, it subsequently managed to stabilise somewhat above $57 per ounce.

“Much of these gains came during the thin Thanksgiving markets. So, silver can expect to be tested further this week, so see just how solid, or otherwise, its recent gains prove to be,” Morrison said. 

At the time of writing, the March silver contract on COMEX was at $58.375 per ounce, down 1.4%. 

The three-month copper contract on the London Metal Exchange was at $11,235 per ton, slightly lower than the previous day’s close. 

Copper prices surged to a record high of over $11,200 per ton in Monday's session, fueled by strong market sentiment. 

This rally is primarily driven by a tight supply outlook, reductions in mine production, and increasing global demand stemming from the energy transition.

The recent depreciation of the US dollar further bolstered copper's upward movement.

“The higher the copper price rises, the more attractive it becomes for smelters that are not participating in the agreed-upon cuts to ramp up their production,” Thu Lan Nguyen, head of FX and commodities research at Commerzbank AG, said in a report. 

Oil slips

Oil prices fell slightly on Tuesday as traders weighed up risks from Ukrainian drone strikes on Russian energy sites and concerns about oversupply.

Oil market uncertainty was sparked by two separate events.

On Monday, the Caspian Pipeline Consortium announced that it had restarted oil shipments from one mooring point at its Black Sea terminal, following a significant Ukrainian drone attack that occurred on November 29.

Separately, US President Donald Trump's statement on Saturday, which declared "the airspace above and surrounding Venezuela" should be considered closed, raised fresh concerns given the South American nation's status as a major oil producer.

Meanwhile, Trump’s Special Envoy, Steve Witkoff, is currently in Moscow for a meeting with President Putin. The purpose of this meeting is to discuss a revised peace plan intended to conclude the war in Ukraine.

Concerns about a potential oversupply, stemming from increased production by OPEC+ members, have recently exerted downward pressure on prices. 

In light of this, OPEC+ met on Sunday and agreed to maintain oil output levels for the first quarter of 2026. This decision reflects the group's caution in regaining market share amidst fears of an impending supply glut.

At the time of writing, the price of West Texas Intermediate crude oil was at $58.99 per barrel, down 0.5%, while Brent was also 0.5% lower at $62.87 per barrel.