Commodity wrap: gold, silver rally while oil drops on oversupply and peace talk hopes

Gold prices were hovering below the $4,400-per-ounce mark as safe-haven buying increased, while the dollar slipped against major currencies.

Silver prices on COMEX also rose more than 3% on Monday, with the metal shy of Friday’s record high.

Meanwhile, oil prices were in the red as a potential peace deal between Russia and Ukraine weighed on sentiment.

Gold climbs 1%

The price of gold rose by 1% on Monday, settling near a seven-week peak as a weaker dollar, anticipation of interest rate reductions, and safe-haven investments fueled by current geopolitical instability buoyed the market.

Gold priced in the greenback became more accessible to international purchasers as the dollar, which makes the precious metal more affordable for overseas buyers, remained near the two-month low it hit last week.

Benchmark 10-year US Treasury yields also experienced a slight decline.

Last week, the US Federal Reserve reduced its interest rate by 25 basis points, following a divided vote.

Any additional easing of monetary policy will be contingent upon the future performance of the labour market and inflation levels.

Markets are currently pricing in two US rate cuts next year, with investors eyeing this week's US nonfarm payrolls report for further clues on monetary policy.

“Gold demand looks likely to increase should the dollar come under further downside pressure,” said David Morrison, senior market analyst at Trade Nation.

Meanwhile, silver's price increased by 3.2%, reaching $63.955 per ounce.

This follows a volatile session on Friday, where it hit a record high of $64.65 before dropping significantly by the close.

Following a sharp retreat from fresh record highs on Friday, silver experienced a strong overnight rebound, surging approximately 2% and regaining its bullish momentum.

“The price action highlights silver’s heightened sensitivity to positioning and sentiment, with sharp swings likely to persist after its recent explosive run,” Morrison said.

Oil falls

At the time of writing, the price of West Texas Intermediate crude oil was at $56.96 per barrel, down 0.5%, while Brent was at $60.87 per barrel, down 0.4%.

A projected worldwide oil surplus in 2026 caused both contracts to drop over 4% last week.

Venezuela's oil exports have significantly declined following the US seizure of a tanker and the imposition of new sanctions on shipping companies and vessels involved in trade with the Latin American oil producer.

The intensifying US pressure on President Nicolas Maduro, which includes reported plans by Reuters for America to intercept more ships carrying Venezuelan oil, is being closely monitored by the market for its potential impact on global oil supply.

Talks between Ukrainian President Volodymyr Zelenskiy and US envoys in Berlin concluded after five hours on Sunday, with negotiations scheduled to resume on Monday.

During the discussions, President Zelenskyy proposed abandoning Ukraine's ambition to join the NATO military alliance.

While US envoy Steve Witkoff stated that "a lot of progress was made," no further details were released.

A potential peace agreement resulting from these talks could lead to an increase in Russian oil supply, which is currently subject to sanctions by Western nations.

According to JPMorgan Commodities Research in a Saturday note, oil surpluses are anticipated to broaden further through 2026 and 2027, following expected widening in 2025.

This projection is based on global oil supply being forecast to increase at three times the rate of demand growth through 2026, thus outpacing it.

“Oversupply fears continue to dominate the longer-term narrative while global demand growth continues to slow,” Morrison said.