Oil prices moved lower as traders assessed signs of weakening demand and the lack of significant progress in US-Iran peace talks regarding the reopening of the Strait of Hormuz. Spot gold erased its gains for the year. Base metals were broadly lower.
Oil: Prices Drop as Market Weighs Peace Talks and Demand Signals
Crude oil prices fell as traders evaluated indications of softening demand and the limited headway in US-Iran negotiations concerning the Strait of Hormuz.
WTI declined by 2.7%, settling above $90 per barrel, while the global benchmark Brent crude closed near $93 per barrel.
Open interest for both major crude benchmarks has been trending downward, amplifying price volatility as geopolitical uncertainty dampens risk appetite.
Despite Iran-backed Hezbollah in Lebanon rejecting a US-mediated ceasefire agreement, US President Donald Trump stated that talks with Iran are progressing well.
Lebanese President Joseph Aoun told CNN it is unacceptable for Iran to use Lebanon as a "bargaining chip" in its negotiations with the United States.
Traders are also monitoring signs of demand destruction globally, stemming from high prices and declining inventories.
Several major energy forecasting agencies have projected that global oil demand growth could see a rare decline this year.
"Global demand destruction is continuing to expand," said Dennis Kissler, senior vice president at BOK Financial Securities. "Crude prices are trying to find a balance between tightening supplies, weakening demand, and the still-high probability of a final peace agreement."
WTI for July delivery fell 2.7% to settle at $90.54 per barrel.
Brent for August delivery dropped 2% to settle at $93.09 per barrel.
Base Metals: Broad-Based Declines
Base metals fell across the board as the US dollar posted its largest single-day gain in 12 weeks following stronger-than-expected US employment data.
At the close, LME copper was down 3% at $13,519.5 per metric ton.
LME aluminum fell 2% to $3,592 per metric ton.
LME nickel declined 0.6% to $18,581 per metric ton.
LME zinc dropped 1.6% to $3,530 per metric ton.
LME tin plunged 5% to $52,935 per metric ton.
LME lead decreased 0.6% to $2,005 per metric ton.
Precious Metals: Spot Gold Wipes Out Year-to-Date Advance
Spot gold erased its gains for the year as robust US jobs data bolstered market bets that the Federal Reserve could raise interest rates this year, which is typically negative for the precious metal.
Following the latest US data showing May job growth exceeded all expectations, bond yields and the dollar rose. Spot gold fell as much as 3.6% on Friday to $4,315.35 per ounce, erasing its year-to-date gains. The strength in the labor market reinforced expectations for Fed rate hikes at a time when Middle East tensions are pushing energy prices higher. Rate hikes are generally unfavorable for non-yielding assets like gold.
"Higher real yields and a stronger dollar are a double whammy for gold," said Elias Haddad, global market strategist at Brown Brothers Harriman & Co. Haddad noted that a break below the closely watched long-term momentum indicator—the 200-day moving average—would risk further declines for the gold price.
Phil Streible, chief market strategist at Blue Line Futures, said the sell-off in equities, led by technology stocks, also exacerbated gold's decline as some investors reduced positions to cover losses in other areas.
As of 5 p.m. New York time, spot gold was down 3.3% at $4,328.45 per ounce.
Spot silver fell 8.2% to $67.833 per ounce.
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