Commodity wrap: silver plummets 13%, gold below $4,900; oil dips on Iran talks

Precious metals are experiencing renewed selling pressure, with silver prices falling sharply on Thursday.

This decline has largely erased the brief rebound the sector saw earlier this week.

On COMEX, the March silver contract shed more than 13% on Thursday, while gold fell more than 2% below $4,900 per ounce. 

Meanwhile, oil prices also fell as easing geopolitical tensions between the US and Iran dampened sentiments among traders. 

Copper prices received support this morning, despite base metals softening overall. 

This was due to US President Donald Trump's plan to establish a strategic reserve for critical minerals, and a separate proposal from the Nonferrous Metals Association to include copper and copper concentrates in that reserve.

Silver and gold crash

Gold and silver prices fell sharply again on Thursday as the market’s rebound over the last couple of sessions did not last. 

Gold is having difficulty gaining momentum because global central banks, most recently the European Central Bank, are sticking to neutral monetary policies by keeping interest rates unchanged.

As anticipated, the European Central Bank (ECB) has decided to keep its key interest rates stable. 

The rates for the deposit facility, main refinancing operations, and marginal lending facility remain unchanged at 2.00%, 2.15%, and 2.40%, respectively.

“The Greenback is acting as a safe-haven again, drawing support in risk-off markets, as the quarterly earnings from US tech giants failed to convince investors, triggering a sell-off in the sector that has dragged down equity indexes across the globe,” FXStreet said in a report. 

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

However, experts continue to believe that the sell-off in the gold and silver market is a normalisation phase rather than a reversal in trend. 

The fundamentals, such as central bank demand for gold and industrial demand for silver, which were behind the surge in prices, still remained intact. 

At the time of writing, the gold contract on COMEX was at $4,883.69 per ounce, down 1.4%, while silver was 10.6% lower at $75.397 per ounce. 

Oil slips over 2%

Despite a more than 2% drop on Thursday, oil prices remained near multi-month highs following the announcement that the US and Iran would hold talks in Oman on Friday.

Markets will be closely monitoring the talks in Oman as Iran is one of the prolific oil producers within the Organisation of the Petroleum Exporting Countries group. 

Amidst a US military build-up in the Middle East, regional actors are engaging in talks aimed at preventing a military clash. 

There is widespread concern that such a confrontation could quickly spiral into a broader conflict.

The Strait of Hormuz, located between Iran and Oman, is a crucial chokepoint for global oil supply, handling approximately one-fifth of the world's total oil consumption. 

Iran and other major OPEC producers, including Saudi Arabia, Kuwait, Iraq, and the United Arab Emirates, rely on this strait for the majority of their crude oil exports.

The market is expected to likely drift as anticipation builds for Friday's meeting and hopes for a diplomatic breakthrough, according to John Evans, an analyst at PVM Oil Associates.

The price of West Texas Intermediate crude oil was 2.4% lower at $63.58 a barrel, while Brent was down 2.3% at $67.85 a barrel. 

Copper slips 

Copper prices found support this morning, despite a general softening in base metals. 

However, as the day moved along, copper prices fell more than 1% due to a stronger dollar against a basket of major currencies. 

Meanwhile, the US military is increasing its presence in the region, prompting a warning from Donald Trump to Iran to be "very worried." 

Copper prices continued to fall, primarily due to increased inventories and weaker demand from Chinese buyers, according to Neil Welsh, head of metals market at Britannia Global Markets. 

Despite the overall weak demand, there are indicators of strong consumption from Chinese power grids, with the State Grid Corporation of China reporting a significant 35% year-on-year rise in fixed-asset investment to 30.8 billion yuan in January.

The Viscaria copper mine, located in Kiruna, Sweden's northernmost town, is scheduled to resume operations by 2028, signalling a return to copper mining activity in the area. 

The mine previously operated between 1983 and 1997, initially under the management of the state-owned Swedish iron ore mining company, LKAB, before being acquired by Outokumpu.

At the time of writing, the three-month copper contract on the London Metal Exchange was at $12.930 per ton, down 1%.