Crude oil prices edged lower on Tuesday as investors assessed the situation in Iran. Inflationary concerns weighed on gold, while nickel prices climbed on news of production cuts and export controls in Indonesia.
Crude Oil: Prices Dip as Traders Weigh Trump's Latest Iran Threat Oil prices closed slightly lower in volatile trading on Tuesday. Market participants evaluated the latest threats from U.S. President Donald Trump to resume military action against Iran. Since a ceasefire was reached in early April, Trump has issued multiple threats of strikes that have not materialized.
West Texas Intermediate (WTI) crude traded near $104 per barrel. Trump stated on Tuesday that if Iran did not agree to U.S. peace terms, "we may have to hit them hard again." This followed a statement less than a day earlier that he had just called off a planned strike. For traders who have endured 12 weeks of market volatility driven by the conflict, this pattern is familiar, leading many to hesitate in adding bullish positions without more concrete evidence of a resumption of hostilities.
Prices faced additional downward pressure from reports that NATO is discussing the possibility of assisting vessels through the Strait of Hormuz if it remains closed by early July.
A Goldman Sachs survey earlier this month indicated investors are increasingly pricing in a scenario where the Strait of Hormuz remains closed beyond July. This suggests that a NATO-led effort to guide ships through this critical chokepoint could restore supply faster than anticipated.
Meanwhile, White House officials remain firmly opposed to restricting oil exports, despite declining domestic inventories.
Closing Prices: July WTI crude on the New York Mercantile Exchange fell 23 cents to settle at $104.15 per barrel. The June contract expired on Tuesday with less activity than the July contract. July Brent crude on ICE Futures Europe declined 82 cents to settle at $111.28 per barrel.
Precious Metals: Gold Prices Decline Gold prices fell on Tuesday as persistent inflation concerns led investors to bet that global central banks may be forced to raise interest rates. Silver prices dropped to near a two-week low.
Gold initially fell as much as 2.2% before paring some losses. Fears that war with Iran could exacerbate inflation fueled a sell-off in global bond markets, pushing the yield on the 30-year U.S. Treasury to levels last seen in 2007, just before the global financial crisis.
High energy prices have intensified investor worries about inflation, increasing the risk that the Federal Reserve and other central banks may need to keep interest rates elevated. Before the U.S. and Israel initiated conflict with Iran, market expectations were for central banks to cut rates.
Vasu Menon, a strategist at OCBC Bank, noted that the Middle East situation, along with movements in oil prices and bond yields, could continue to pressure gold in the near term. He added, "Given the significant political and economic changes unfolding globally, which appear set to accelerate in the coming years, we continue to view gold as a useful hedge against global uncertainty."
Silver has experienced sharp volatility this month. It rallied to near $90 per ounce last week on optimism about demand from AI-related stocks and data center infrastructure, before retreating to around $74 on Tuesday.
As of 3:36 PM New York time, spot gold was down 1.7% at $4,488.16 per ounce. Spot silver fell 4.6% to $74.18 per ounce. Platinum and palladium also declined.
Base Metals: Nickel Prices Rise Nickel prices advanced on Tuesday following reports that Indonesia, the world's largest producer, is implementing further production cuts and measures to control commodity exports.
Nickel on the London Metal Exchange (LME) rose sharply during Asian trading hours. This followed a report from Shanghai Metals Market stating that 10% to 15% of high-grade nickel pig iron capacity at Indonesia's Weda Bay Industrial Park will undergo rotational maintenance in the coming months.
Prices received an additional boost from Indonesia's plans to tighten export controls on commodities including coal and palm oil. Nickel surged as much as 3.2% to $19,165 per ton before paring gains.
Indonesia had already reduced some nickel pig iron output since March and April due to reduced ore supply and high costs. The situation has been exacerbated by the reallocation of power resources to new aluminum capacity.
Industrial metals were mixed on Tuesday, with nickel on the LME closing 1.3% higher.
LME Closing Prices: Three-month copper fell 1.3% to $13,411 per metric ton. Three-month aluminum rose 0.9% to $3,602.5 per ton. Three-month zinc declined 0.3% to $3,513 per ton. Three-month nickel gained 1.3% to $18,806 per ton. Three-month tin dropped 1.8% to $51,613 per ton. Three-month lead decreased 1% to $1,963.5 per ton.
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