Commodity wrap: Oil slumps on peace deal hopes; gold up on weak dollar

Oil prices slumped more than 3% on Thursday on hopes for a resolution in the US-Iran war, which could ease supply from the Strait of Hormuz.  

Gold and silver gained nearly 1% as energy prices fell sharply, which eased concerns about higher inflation and elevated interest rates. 

Copper prices fell back below $14,000 per ton, but gained nearly 1% at the time of writing, while aluminium contracts fell on the London Metal Exchange.  

The three-month copper contract on the LME was at $13,196 per ton, up 0.9%, while aluminium was 0.9% down at $3,667.60 per ton. 

Oil slumps

Oil prices fell around 3% on Thursday as investors grew hopeful that the US–Israeli war with Iran could be nearing an end, potentially reopening the Strait of Hormuz.

At the time of writing, the price of Brent crude oil was at $94.64 per barrel, down 3.2%, while the West Texas Intermediate contract was 3.9% down at $92.29 per barrel.    

The decline followed a ceasefire deal announced between Israel and Lebanon late Wednesday, which raised expectations of progress in broader negotiations involving Washington and Tehran.  

Iran has made clear that any agreement with the US would depend partly on halting fighting between Israel and Hezbollah, its ally in Lebanon.

The two crude benchmarks had risen about 2% on Wednesday after renewed hostilities, including Iranian attacks on Kuwait and US military strikes near the Strait of Hormuz.  

Lebanon’s Hezbollah chief Naim Qassem said Thursday that northern Israel would not be safe as long as Lebanese villages were bombed and civilians killed, calling negotiations with Israel “shameless.”

US President Donald Trump suggested on Wednesday that progress in talks with Iran could come as soon as this weekend.  

Iranian Foreign Minister Abbas Araqchi confirmed that contacts with Washington had not been cut off, but acknowledged no progress had been made. He said both sides were still studying texts exchanged during earlier rounds of negotiations.  

In Washington, the Republican‑led House of Representatives approved a resolution on Wednesday to block Trump from continuing the war against Iran. The measure would need Senate approval and a two‑thirds majority in both chambers to override what is expected to be a presidential veto.  

Meanwhile, Russian Deputy Prime Minister Alexander Novak said Thursday that the country’s oil production has declined since the start of the year due to unplanned refinery maintenance. It was the first time a Russian official publicly acknowledged the drop.  

US crude stockpiles fell sharply last week, dropping by 8 million barrels to 433.7 million, according to the Energy Information Administration. The draw was double the 4‑million‑barrel decline analysts had expected in a Reuters poll.  

Trade sources reported that Iranian crude slipped into discounts for the first time since April, while Russian premiums eased as sellers cut prices to attract Chinese buyers amid sluggish demand.  

Elsewhere, OPEC Secretary General Haitham Al Ghais said at the St. Petersburg International Economic Forum that the group still expects robust oil demand growth this year and is not revising its estimates, despite the Middle East conflict and the closure of the Strait of Hormuz. 

Gold gains

Gold prices rose more than 1% on Thursday as oil slipped on optimism over a possible end to the Iran conflict, which weighed on the dollar and pushed bond yields lower.  

Reports of a ceasefire deal between Israel and Lebanon helped bullion hold just above its 200‑day moving average, according to independent metals trader Tai Wong.

Oil prices fell more than 3% on the news, amid hopes that the Strait of Hormuz could reopen.  

The dollar eased 0.2%, making gold cheaper for holders of other currencies, while lower yields on US Treasuries, including the 10‑year note, boosted the metal’s appeal.  

Gold, a traditional safe‑haven, hit a record high of $5,594.82 per ounce on January 29 but has lost about 16% since the Iran conflict began in late February.

Elevated interest rates continue to weigh on non‑yielding bullion.  

The August gold contract on COMEX was last at $$4,507.07 per ounce, up 0.9% from the previous close. Silver was 0.7% higher at $74.195 an ounce. 

Investors are now focused on Friday’s US employment report for May, which could provide fresh insight into the labor market and guide the Federal Reserve’s next policy steps.