Commodity wrap: gold tops $4,900; oil plunges 13% as Iran reopens Hormuz

Gold prices climbed over $4,900 per ounce on Friday for the first time in nearly a month as the dollar fell against major currencies, and as hopes for a peace deal between the US and Iran increased. 

Silver on COMEX also surged 5% and breached the $83 per ounce mark, tracking gains in gold. 

Friday saw a steep drop of approximately 13% in oil prices. This decline followed two key developments: Iran's foreign minister announced that the Strait of Hormuz was open for all commercial vessels for the remainder of the ceasefire, and US President Donald Trump stated that Iran had agreed not to close the Strait in the future.

Meanwhile, aluminium prices dropped as supply concerns from the Strait of Hormuz eased, following statements from Iran and the US. 

Following Iranian strikes on smelters in Abu Dhabi and Bahrain late last month, Aluminium prices had soared by about 15%.

This surge intensified supply deficits, leading JPMorgan to issue a stark warning that the industry is facing a "black hole."

At the time of writing, the three-month aluminium contract was at $3,553.30 per ton, down 2.5% from the previous close. 

Gold surges

Gold prices saw further increases on Friday, supported by a weaker dollar and a statement from Iran's foreign minister.

The minister's comments, which helped push oil prices down, also served to alleviate some inflation worries.

“The price of gold has also rebounded amid hopes for an end to the war, as this eases concerns that central banks will have to respond to higher inflation risks with a more restrictive monetary policy, thereby increasing the opportunity cost of holding gold,” Barbara Lambrecht, commodity analyst at Commerzbank AG, said in a report. 

At the time of writing, the COMEX gold contract was at $4,889.99 per ounce, up 1.7% from the previous close.

The contract had risen to $4,912.04 an ounce earlier in the session, its highest level in nearly a month. 

The current price for an ounce of gold has increased by $400 since mid-March, now exceeding $4,800.

Following the comments regarding the opening of Hormuz, both the US dollar and oil prices continued their decline.

This drop in the US currency increases the appeal of bullion for those holding other currencies.

Oil plummets 13%

Oil prices plummeted as optimism increased regarding the reopening of the Strait of Hormuz, through which 20% of the world’s oil and liquefied natural gas transits. 

Following the agreement of a ceasefire in Lebanon, Iranian Foreign Minister Abbas Araqchi confirmed that the Strait of Hormuz was open.

At the time of writing, the Brent crude contract was at $88.98 a barrel, down 10.4%, while West Texas Intermediate was down 12.2% at $83.10 a barrel.

Brent had fallen to a low of $86.10 per barrel, while WTI slipped to $80.59 a barrel.

Both contracts were poised for their largest daily declines since April 8, trading at their lowest levels since March 10.

According to an Axios reporter's post on X, the United States and Iran are advancing in their negotiations regarding a three-page memorandum of understanding aimed at concluding the conflict.

Investors' hopes that the Middle East conflict might be concluding caused prices to drop earlier in the session.

This optimism was spurred by the prospect of further talks between the United States and Iran, alongside a 10-day ceasefire agreed upon by Lebanon and Israel.

A key development in the talks was mentioned by Trump: Tehran reportedly proposed a commitment to refrain from possessing nuclear weapons for over two decades.

"We're going to see what happens. But I think we're very close to making a deal with Iran," Trump told reporters outside the White House on Thursday.

On Friday, Trump announced that the United States had prohibited Israel from conducting further bombings in Lebanon.

This statement used a notably harsher tone than typically employed toward the longtime US ally.

Despite the subsequent announcement that the strait had been opened, Trump said that a US military blockade against Iran, involving over 10,000 personnel, was still in effect.