Crude oil futures advanced on Monday as persistent signals pointed to a prolonged Middle East conflict, while gold prices gained ground on a softer dollar fueled by fading expectations of further U.S. rate hikes. Copper held near flat, with the market grappling with a severe supply crunch.
Oil: Prices Firm as Middle East Tensions Escalate
Oil prices climbed as signs emerged that the Middle East conflict would not ease anytime soon, dampening hopes that shipments through the Strait of Hormuz would quickly return to pre-war levels. Brent crude rose to near $91 a barrel, building on a 6% gain from the previous week. U.S. Energy Secretary Wright indicated a long-term strategy toward Iran, suggesting Washington has no immediate plans to push for de-escalation. Fox News earlier reported that President Trump threatened to bomb Oman if it obstructed U.S. efforts to blockade Iran. Although talks between Tehran and Washington appear stalled, evidence shows Middle Eastern producers are still moving substantial crude volumes out of the Persian Gulf through unconventional methods like "dark fleet" transfers, which has helped temper price gains. U.S. officials continued to strike a more hawkish tone this week, following Treasury Secretary Bessent's remarks that new economic restrictions could be introduced soon. Arne Lohmann Rasmussen, chief analyst at Global Risk Management, noted that "more oil transiting through the Strait of Hormuz and a U.S. pivot toward economic sanctions rather than military pressure are lowering the geopolitical risk premium and capping upside in prices." Brent for October delivery settled up 2.7% at $90.87 a barrel, while WTI for September delivery rose 2.6% to close at $84.50 a barrel.
Precious Metals: Gold Advances on Dollar Weakness
Gold prices moved higher on Monday, extending a two-week rally, as cooling expectations for U.S. rate increases weighed on the dollar. The metal rose as much as 1.1% to around $4,425 an ounce, adding to a near 1% gain from the prior week. The Bloomberg Dollar Index slid to its lowest level since May, making dollar-denominated bullion cheaper for many buyers. Swap markets no longer fully price in a rate hike before year-end, with Justin Lin, analyst at Global X ETFs, saying that "the market sees the Fed as not really hawkish in the near term." He added that gold "needs a significant break above $4,400 to confirm that upward momentum still has room to extend." The Federal Reserve is set to release minutes from its July policy meeting on Wednesday, which could offer clearer clues on rate deliberations. As of around 4:22 p.m. in New York, spot gold was up 0.9% at $4,417.64 an ounce, while spot silver gained 1.8% to $65.8285 an ounce.
Base Metals: Copper Flat Despite Severe Supply Tightness
Copper prices held steady as expectations of potential U.S. import tariffs on the metal have driven large volumes to American shores, creating acute supply tightness in global markets. With buyers scrambling to secure supply, global copper prices are hovering near record highs. Three-month copper on the London Metal Exchange rose as much as 1.7% on Monday, while spreads surged, highlighting growing scarcity of physical metal. Spot copper at one point traded at a premium of $545 per metric ton over the three-month contract, the highest backwardation since the historic squeeze of 2021. Ewa Manthey, commodities strategist at ING, noted that the hefty premium for near-dated contracts "indicates that available metal remains scarce," adding that "these supply constraints are expected to continue providing strong support to the market in the near term, particularly if demand stays resilient." The current price rally coincides with trader bets that President Trump will impose tariffs on refined copper imports into the U.S., though the White House has not disclosed specific plans. A deadline for the Commerce Department to submit recommendations passed seven weeks ago without any announcement. While copper flows into the U.S., tighter near-term supply has also drawn metal to other destinations, leading to a near halving of inventories across the LME's global warehouse network since mid-May. Although stocks rebounded above 207,800 tons on Monday, they had previously declined for 42 consecutive sessions, with total holdings at the end of last week hitting their lowest since February. Three-month copper on the LME settled at $14,157.50 a ton, roughly unchanged, erasing intraday gains. Among other metals, aluminum rose 0.4% and zinc gained 0.3%.
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