Crude oil prices advanced on Thursday as investors cast doubt on the likelihood of a US-Iran agreement. Gold climbed back above the $4,600 per ounce threshold, with market participants awaiting Friday's remarks from Federal Reserve Chair Kevin Warsh for clues on the interest rate trajectory. Meanwhile, zinc retreated from its strongest level in over four years, though traders remained focused on signs of tightening supply on the London Metal Exchange.
Oil prices moved higher as indications emerged that diplomatic efforts aimed at reaching a deal concerning the Strait of Hormuz had hit obstacles, raising concerns about the sustainability of energy shipments through the crucial waterway. West Texas Intermediate crude gained 1.6%, settling near $84 per barrel. The Brent October contract, set to expire on Friday, traded near $90 per barrel on thin volumes, while the more actively traded November contract settled just below the $89 mark.
Reports indicated that former President Donald Trump had told mediators he had no intention of returning to the terms of the ceasefire agreement reached with Iran in June. This development dampened hopes that a revenue-sharing arrangement between Iran and Oman over the Strait of Hormuz could soon pave the way for a broader understanding with Washington. White House Press Secretary Karoline Leavitt told reporters earlier on Thursday that the United States was not engaged in negotiations with Iran and that the blockade against the country would remain in force.
Brent for October delivery rose 2.1% to settle at $89.70 per barrel, while the more active November contract gained 1.8% to close at $88.52. WTI for October advanced 1.6% to finish at $83.53 per barrel.
Gold prices returned to above the $4,600 per ounce level as investor attention shifted toward the Federal Reserve's policy path ahead of the central bank's Jackson Hole symposium. The precious metal fluctuated between gains and losses on Thursday, following the conclusion of a five-session winning streak the previous day. US economic data released this week showed inflation running well above the Fed's target, raising the likelihood of further rate hikes, which typically weigh on bullion. However, gold remains up roughly 14% this month, supported by last week's unexpected Treasury intervention in the bond market.
Kevin Warsh is scheduled to deliver his first major speech as Fed Chair at the Jackson Hole symposium on Friday, with investors seeking signals on how the central bank plans to tackle inflation. The address also offers Warsh an opportunity to counter criticism that he has not been forthcoming about his economic outlook. According to Liu Shiyao, an analyst at Zijing Tianfeng Futures, if Warsh's remarks do not set the stage for a September rate increase, the market could interpret them as dovish.
As of 3:19 pm in New York, gold was up 0.4% at $4,610.89 per ounce. Silver advanced 1.7% to $69.29 per ounce, while platinum and palladium also posted gains.
Zinc retreated from its strongest level in over four years, although traders continued to monitor signs of tightening supply on the London Metal Exchange. The LME zinc futures contract closed 0.2% lower at $3,884 per tonne. Similar to copper, the zinc market is exhibiting signs of near-term supply tightness, with the premium of spot metal over futures continuing to widen. On Wednesday, the spread between cash zinc and the three-month futures contract reached nearly $200 per tonne, the largest gap since December. That premium expanded further to $231.75 per tonne on Thursday.
Supply of zinc on the LME and across the industry has tightened due to ore shortages, which have pushed treatment charges charged by smelters well below zero. The copper market is displaying a similar trend, with widening short-term spreads, relatively low inventories, and negative treatment charges. In the case of copper, the potential imposition of US import tariffs has been a key driver of prices. At the London market close, LME copper edged up 0.2% to $14,282.50 per tonne, LME aluminium rose 0.3% to $3,234.50 per tonne, LME zinc slipped 0.2% to $3,884 per tonne, LME nickel was roughly flat at $16,878 per tonne, LME tin gained 1% to $55,354 per tonne, and LME lead advanced 0.3% to $1,915.50 per tonne.
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