Oil prices fell for a third consecutive session amid signs of a potential agreement to reopen the Strait of Hormuz. Copper prices rose as investors awaited US tariff decisions while monitoring Middle East negotiations, with demand for risk assets recovering. Gold posted its biggest single-day gain since February, as the prospect of peace in the Middle East weakened expectations for central bank rate hikes, and a break above a key technical resistance level triggered further buying.
Crude Oil: Oil Falls for Third Day as Market Tracks Hormuz Deal Progress
Oil prices declined for the third straight session, driven by signs that the US and Iran are nearing an agreement to reopen the Strait of Hormuz, which could restore millions of barrels per day of crude supply disrupted by months of conflict. WTI fell 0.7% to settle near $75 per barrel, its lowest level in nearly a month. Iran stated it had reached an agreement with Oman on a proposed navigation route through the Strait of Hormuz, but has not yet decided whether to proceed with a second round of negotiations with the US. US President Donald Trump later Tuesday indicated that an agreement on the Strait of Hormuz is imminent. Nevertheless, uncertainty remains in the market. Traders are reluctant to fully unwind long positions, fearing misjudgment in case of a sudden escalation. Earlier, Iran's state television downplayed the outcome of talks between Iran and Oman, suggesting that a potential Strait of Hormuz agreement does not imply an immediate reopening. Rebecca Babin, senior energy trader at CIBC Private Wealth Group, commented, "Traders are trying to gauge market direction from various signals. As oil prices increasingly reflect expectations of progress in the deal, I anticipate that the crude market will remain highly sensitive to every headline for the next few days until more clarity emerges." Oil prices have been on a downward trend this week as markets anticipate a compromise between the US and Iran to restore crude shipments in the Persian Gulf. September WTI settled at $75.22 per barrel, while October Brent settled at $79.45 per barrel.
Base Metals: Copper Rises as Risk Appetite Returns
Copper prices rose as investors awaited US tariff decisions while monitoring negotiations to reopen the Strait of Hormuz, with demand for risk assets recovering. New York copper futures hit new highs as traders positioned ahead of potential US import tariff announcements. Concerns over an escalation of the US-Iran conflict eased, replaced by optimism for resumed shipping through the Strait of Hormuz. Efforts to resolve the Middle East conflict are benefiting base metals, which are sensitive to economic growth expectations. At settlement, LME copper rose 0.3% to $14,110.5 per metric ton; LME aluminum gained 0.6% to $3,241 per ton; LME nickel fell 0.5% to $17,114 per ton; LME zinc advanced 1.5% to $3,729 per ton; LME tin rose 1.3% to $56,718 per ton; and LME lead declined 0.6% to $1,885.5 per ton.
Precious Metals: Gold Posts Biggest Gain Since February
Gold recorded its largest single-day gain since February, as the prospect of a Strait of Hormuz agreement weakened expectations for Federal Reserve rate hikes, and a break above a key technical resistance level triggered further buying. Gold surged over 4% to near $4,250 per ounce, following modest gains in the first two trading days of the week; silver also advanced. Nicky Shiels, head of metals strategy at MKS PAMP, noted that the rally accelerated after gold broke through a key technical resistance level. As of 6:05 p.m. Eastern Time, spot gold rose 4.1% to $4,246.82 per ounce, and spot silver gained 4.2% to $62.0483 per ounce.
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