Oil prices concluded a volatile week with a slight increase as traders assessed tensions in Iran and broader market optimism. A rebound in the U.S. dollar and rising Treasury yields, influenced by remarks from former U.S. President Donald Trump that added uncertainty to the selection of the next Federal Reserve Chair, weighed on gold prices.
Crude oil prices recouped some of the previous session's losses, with traders remaining cautious about Iranian risks heading into the weekend.
Oil prices ended a turbulent week with modest gains as traders evaluated geopolitical tensions in Iran and positive sentiment across wider markets.
February-delivery WTI futures rose 0.4%, settling at $59.44 a barrel. This follows a sharp 4.6% plunge on Thursday, which marked the largest single-day decline since June.
March-delivery Brent futures settled 0.6% higher at $64.13 per barrel.
A social media post from Donald Trump, stating he "respectfully" acknowledged Iran's decision to cancel the execution of protesters, lowered market expectations for an immediate U.S. response to the recent violent protests in Iran.
However, Washington is reinforcing its military presence in the Middle East. According to a Fox News report, at least one aircraft carrier is headed to the region, with additional military assets expected to be deployed in the coming days and weeks.
During periods of heightened geopolitical risk, traders often hedge their bearish bets ahead of the weekend.
Warren Patterson, Head of Commodities Strategy at ING, noted, "While the immediate risk of U.S. intervention in Iran has diminished, the possibility remains, which should keep the market on edge in the near term. However, if the U.S. response is delayed, the risk premium will fade, and more bearish fundamental factors will take the lead."
Scheduled talks between the U.S. and Ukraine in Miami this weekend, coupled with uncertainty over the prospects for a Russia-Ukraine ceasefire, present significant headwinds for oil prices.
Gold prices declined on Friday after Donald Trump expressed reservations about nominating Kevin Hassett as Federal Reserve Chair, introducing fresh uncertainty into the process of selecting the next central bank chief.
Trump stated on Friday that his administration would lose one of its most effective economic advocates if Hassett were to step down as Director of the National Economic Council. Hassett has been considered a leading candidate to succeed Jerome Powell as Fed Chair.
Following Trump's comments, the dollar pared its losses and U.S. Treasury yields climbed, pushing gold down by as much as 1.7% at one point.
Uncertainty surrounding the new head of monetary policy may continue to provide support for precious metals, yet pressure on gold persists due to concerns that the Fed may not cut interest rates as aggressively as the market anticipates.
Spot silver fell by as much as 5.1%.
As of 4:13 PM ET, spot gold was down 0.66% at $4,585.61 per ounce.
Spot silver declined 3.25% to $89.4164 per ounce, while the Bloomberg Dollar Spot Index was largely flat.
Base metal prices fell sharply on the final day of a dramatic week.
Benchmark futures for copper, tin, zinc, and aluminum on the London Metal Exchange (LME) all moved lower.
Earlier in the week, metals had surged strongly, driven by broad investor enthusiasm for physical assets, with copper and tin on the LME both hitting record highs.
Ewa Manthey, Commodities Strategist at ING, suggested that selling pressure in the Shanghai market helps explain the "speed and cross-metal characteristics" of the market movement. She added that beyond this, the decline was likely amplified by traders closing long positions and unwinding arbitrage trades, rather than being driven by any new demand or macroeconomic signals.
At the close of London trading, LME copper was down 2.3% at $12,803 per metric ton; LME aluminum fell 1.1% to $3,134 per ton; LME nickel dropped 5.3% to $17,578 per ton; LME zinc declined 3.2% to $3,209 per ton; LME tin plunged 7.8% to $47,982 per ton; LME lead decreased 2.6% to $2,044 per ton.
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