Commodity wrap: Gold set for weekly rise; oil recovers while copper surges

Gold prices were headed for a weekly rise following a stronger-than-expected jobs report in the US.

Oil prices recovered from Thursday’s sharp losses to trade in the green as uncertainty remained regarding the US and Iran peace negotiations. 

Gold set for weekly rise

Gold prices rose further on Friday and were set for a weekly gain.

The yellow metal extended gains following a stronger-than-expected US jobs report. 

Additionally, reduced concerns over inflation and high interest rates, fueled by optimism about a possible resolution to the Iran conflict, also contributed to the rise in prices.

The US labor market demonstrated continued resilience in April, as data revealed a greater-than-anticipated increase in employment and the unemployment rate remained unchanged at 4.3%.

Gold, a traditional safe haven asset during global instability, is currently under pressure because its non-yielding nature makes it less attractive compared to investments that offer returns, such as those influenced by rising interest rates.

The market's expectation for a rate hike this year has decreased, with the CME FedWatch tool indicating only about a 14% chance, down from approximately 22% the day before.

Despite a flare-up involving clashes between US and Iranian forces in the Gulf and renewed attacks on the United Arab Emirates, President Donald Trump maintained that the ceasefire remains in effect.

“While tensions remain elevated, investors appear hopeful that a broader peace agreement between the US and Iran can be reached. If they’re correct, then that should help to underpin gold prices over the short term,” said David Morrison, senior market analyst at Trade Nation. 

At the time of writing, the COMEX gold contract was at $4,721.76 per ounce, up 0.2%, while silver was 0.8% higher at $80.780 per ounce. 

Oil steadies 

Early gains in oil prices were erased on Friday after new skirmishes near the Strait of Hormuz cast fresh doubt on the existing ceasefire between Iran and the US.

At the time of writing, the price of West Texas Intermediate was at $95.14 per barrel, up 0.4%, while Brent was at $101.48 a barrel, up 0.4%. Both benchmarks had risen 3% earlier in the day. 

A decline of approximately 7% was still anticipated for both contracts over the week.

Clashes erupted between US and Iranian forces in the Gulf, coinciding with renewed attacks on the UAE.

This occurred as Washington awaited Tehran's reply to its proposal aimed at ending the conflict, which had commenced with joint US-Israeli airstrikes across Iran on February 28. 

US President Donald Trump, however, later downplayed the exchange, assuring reporters that the ceasefire remained active.

“Even in the event of an agreement, however, oil prices are likely to fall only limitedly at first, as a return to the old normal is not to be expected for now,” Barbara Lambrecht, commodity analyst at Commerzbank AG, said in a report. 

Given its likely status as a persistent critical choke point, a risk premium remains justified for the Strait of Hormuz.

Even if an agreement is reached, all these factors indicate that the oil price will initially settle at a significantly higher level than before the Iran war, a level which Commerzbank anticipates will persist through the end of the year.