Commodity wrap: gold, silver, base metals drop as firm dollar, easing Iran tensions hit sentiments

Gold prices continued to fall on the last day of the week as a stronger dollar and improved risk appetite dented demand for the precious metal. 

Silver was also in the red as prices fell below the $90-per-ounce mark. 

Meanwhile, oil prices climbed after falling sharply in the previous session.

Investors resorted to lower-level buying amid uncertainty over oil supply from Iran. 

A strengthening dollar and news of a Chinese crackdown on high-frequency trading led to a drop in base metal prices on Friday. 

This cooled market sentiment at the end of a dramatic week, following frenzied activity in mainland futures that had previously driven global price increases, according to Neil Welsh, head of metals at Britannia Global Markets.

Gold, silver extend losses

Gold prices fell below the $4,600 level at the time of writing. The metal faces apparent resistance around $4,640, a point that has been difficult for prices to overcome.

“There has been some reduction in safe-haven demand as geopolitical risks around Iran have eased for now,” said David Morrison, senior market analyst at Trade Nation. 

US President Donald Trump does not seem eager to commit to military engagement. 

He stated that the regime claims the protestor massacres have ceased and that those arrested will not face the death penalty.

“Improved risk sentiment has led to a recovery in equities, and while the Fed is expected to ease monetary policy this year, the forecast is that they will keep rates on hold until the summer,” Morrison added. 

Silver prices on COMEX were at $88.15 per ounce, down more than 4.5% as the white metal experiences a sharp sell-off after prices hit record levels earlier this week. 

“The question for traders is whether these recent selloffs are a sign that silver is about to correct down sharply from here, or if it is simply building momentum for another squeeze higher?” Morrison added. 

Oil climbs

Oil prices climbed more than 1% on Friday as concerns over supply from Iran remained. 

“Developments in Iran are currently the decisive price driver on the oil market,” Barbara Lambrecht, commodity analyst at Commerzbank AG, said in a report. 

At the time of writing, the price of West Texas Intermediate crude oil was at $59.87 per barrel, up 1.2%, while Brent was at $64.46 a barrel, up 1.1% from the previous close. 

This week, both benchmarks reached multi-month highs, a surge driven by the eruption of protests in Iran and a signal from US President Donald Trump regarding the potential for military strikes.

The price of oil fell by $3 on Thursday after the risk of immediate American military intervention decreased, a change attributed to the latest statements made by Trump.

However, the potential for the situation to escalate persists, with worries extending beyond the possible loss of Iranian exports, which, as reported by Bloomberg, were nearly 1.9 million barrels per day in the autumn.

Lambrecht said: 

If a sustained easing becomes apparent, attention will likely shift back to developments in Venezuela, according to Lambrecht. This could result in oil, which was previously sanctioned or blocked, gradually returning to the global market, she added. 

Base metals drop

Prices of copper, aluminium and zinc dropped on Friday as a stronger dollar weighed on the complex. 

A stronger dollar makes commodities priced in the greenback more expensive for overseas buyers, limiting demand among investors. 

At the time of writing, the three-month copper contract was at $12,739 per ton, down 3%, while the aluminium contract was 1.6% lower at $3,118.50 per ton. 

The market's attention moved from concerns over US tariffs to economic data. 

A stronger-than-expected initial jobless claims report, combined with firm statements from multiple US Federal Reserve officials, led to a rise in the US dollar and downward pressure on copper prices, said Britannia Global Markets’ Welsh. 

The Fed officials stressed the ongoing priority of combating inflation, maintaining restrictive policies, and indicated a low likelihood of interest rate reductions in the near future.