Commodity wrap: Oil rebounds on Hormuz uncertainty; gold above $4,800

The West Texas Intermediate crude oil briefly reclaimed the $100 per barrel mark on Thursday before easing below the crucial level as concerns about the stability of the two-week Middle East ceasefire gripped the market. 

Meanwhile, gold prices climbed nearly 1% as a weaker dollar lent support to demand for the precious metal. Silver also rose more than 1%, tracking gold’s rise. 

Base metals prices were mixed with copper flat and aluminium slipping nearly 1% at the time of writing. 

The dollar index hitting a one-month low provided a potential lift to base metal prices earlier in the day, which are otherwise trading sluggishly, following the temporary US-Iran ceasefire agreement. 

The three-month aluminium contract on the London Metal Exchange was at $3,443.50 per ton, down 1%, and the copper contract was largely steady at $12,696.80 per ton. 

Oil rebounds from sharp losses

Following their sharpest daily decline since April 2020, oil prices bounced back on Thursday, pushing ICE Brent over 3% higher to trade above $98 per barrel briefly. 

This recovery was fueled by the ongoing conflict in the Middle East and a worsening outlook for a ceasefire, which intensified concerns surrounding the security of the Strait of Hormuz.

The agreement's ceasefire terms were reportedly violated, causing the initial optimism to dissipate, according to Tehran.

Israel has begun its most extensive attack on Lebanon since the invasion started. Meanwhile, President Donald Trump stated that US forces would "stay in place in, and around Iran, until such time as the real agreement reached is fully complied with." 

An Iranian delegation is scheduled to arrive in Islamabad on Thursday night.

Following optimism that the ceasefire would lead to the strait reopening, both Brent and WTI had dropped below $100 per barrel in the last trading session, with WTI experiencing its largest decline since April 2020.

The Strait of Hormuz is a crucial channel for the global oil and gas trade, typically transporting around 20% of the world's supply. This waterway links major Gulf producers, including Saudi Arabia, Iraq, Qatar, and Kuwait, to international markets.

Analysts at Wood Mackenzie said that the disruption in the strait would affect the recovery of 11 million barrels per day of upstream oil production in the Middle East. 

Oil supply disruptions have led to a material tightening of the global crude balance, according to a note from ANZ. This rapid shift has moved the market from an early-year surplus to a significant deficit.

Gold above $4,800

A weaker US dollar on Thursday supported a rise of over 1% in gold prices.

Investors are currently evaluating the stability of the recent Washington-Tehran ceasefire while also anticipating the release of the US consumer price index data.

A decline in the dollar index led to a rise in gold prices. This development makes gold (bullion) more accessible, as it lowers the cost for buyers using foreign currencies.

Investors are also anticipating the release of the US Consumer Price Index (CPI) data for March, which is expected on Friday.

The Federal Reserve's preferred measure of inflation, the Personal Consumption Expenditures (PCE) index, is thought to have increased further in March, following a 2.8% advance in the 12 months through February, which aligned with expectations.

“Looking ahead, gold is likely to remain headline‑driven in the near term, with further clarity on the durability and scope of the ceasefire key for determining whether prices can regain upside momentum,” Ewa Manthey, commodities strategist at ING Group, said in a note. 

Conflicting geopolitical signals are driving choppy price action in gold, with safe‑haven demand offset by shifts in risk sentiment and dollar moves.

At the time of writing, the gold contract on COMEX was at $4,811.70 per ounce, up 0.7%, while silver was at $76.198 per ounce, up 1.1% from the previous close.