Commodity wrap: Oil steady; gold pares early gains

Oil prices held steady Thursday, maintaining prior gains due to the stalled US-Iran peace talks and ongoing trade restrictions in the Strait of Hormuz.

Gold pared most of its earlier gains, following news of a potential Lebanon-Israel ceasefire extension and paring of gains in Treasury yields after US jobless claims data showed a slight increase.

Silver, however, fell more than 2% to trade near $76.255 per ounce on Thursday. 

Despite a strong performance on Wednesday, copper relinquished most of those gains overnight. It continues to be driven by headlines as traders contend with fluctuating signals emerging from the Middle East.

Aluminium, on the other hand, was also steady above the $3,600 per ton mark. The metal remains a key focus due to severe Middle East supply disruptions. 

Strikes on major Gulf smelters and the effective closure of Hormuz have halted significant global output, creating what analysts term a potential "black swan" supply shock.

“With tariffs adding further upward pressure and demand from power infrastructure and AI-related sectors accelerating, aluminium could remain well supported in the near term,” Neil Welsh, head of metals market at Britannia Global Markets, said in an emailed commentary. 

Oil steady

Oil prices remained steady on Thursday, maintaining the previous session's increases. 

This stability was attributed to the stalled peace negotiations between Iran and the United States, as well as ongoing limitations on commerce through the Strait of Hormuz.

At the time of writing, the Brent crude oil contract was at $102.52 per barrel, up 0.6%, while West Texas Intermediate prices were 0.3% higher at $93.19 a barrel. 

On Wednesday, both benchmarks saw a gain of over $3. This increase was driven by two factors: a lack of advancement in the Iran peace negotiations and US gasoline and distillate stock draws that were larger than expected.

Despite US President Donald Trump extending the ceasefire following a request from Pakistani mediators, restrictions remain on ship transit through the strait by both Iran and the US. 

This critical waterway, which previously handled approximately 20% of the world's daily oil supply, has been restricted since the war started on February 28.

Despite Trump's claim on Thursday that the US had "total control" and had "sealed up tight" the Strait of Hormuz until Iran made a deal, Iran seized two ships in the waterway on Wednesday, demonstrating its influence over the strategic chokepoint.

The US has maintained a Navy blockade on Iran's sea trade. However, Iranian parliament speaker and top negotiator Mohammad Baqer Qalibaf stated that a full ceasefire is only viable if this blockade is lifted. 

Countering the narrative of a successful blockade, data analytics company Vortexa reported that approximately 10.7 million barrels of Iranian crude exports successfully traversed the Strait of Hormuz and departed the blockaded area between April 13 and 21.

Separately, shipping and security sources reported on Wednesday that the US military has intercepted at least three Iranian-flagged tankers in Asian waters, redirecting them away from positions near India, Malaysia, and Sri Lanka.

Gold pares early gains

Gold pared early losses on Thursday to trade largely unchanged at the time of writing. 

A second meeting between Lebanese and Israeli envoys is scheduled to take place in the US on Thursday. 

Lebanon is expected to seek an extension of the ceasefire following Israeli airstrikes that killed at least five people, including a journalist, the day before.

Non-yielding bullion became more appealing as an investment after the benchmark 10-year US Treasury yields surrendered most of their earlier gains, pulling back from an over one-week high.

Meanwhile, initial claims for unemployment benefits in the US rose more than expected last week, increasing by 6,000 to a seasonally adjusted 214,000 for the week ended April 18. This figure exceeded the Reuters' poll forecast of 210,000.

In addition, the conflict in Iran has pushed oil prices higher, with Brent crude trading above $100 per barrel on Thursday. This surge is attributed to the stalling of peace negotiations between the US and Iran, alongside ongoing restrictions on trade through the Strait of Hormuz.

The steep rise in energy prices contributes to inflation, which typically increases the likelihood of interest rate hikes. 

Although gold is traditionally viewed as a hedge against inflation, higher interest rates tend to diminish the appeal of this non-yielding asset.

“Gold ETF flows have turned positive over the past three weeks. This points to renewed investor interest following the March sell-off,” Ewa Manthey, commodities strategist at ING Economics, said in a note. 

The COMEX gold contract was at $4,747.60 per ounce, largely unchanged from the previous close.