Oil prices tumbled sharply, pressured by receding Iran conflict risks and a broader commodity sell-off. Copper prices pared their losses as signs emerged that buyers previously deterred by high prices were re-entering the market. Gold and silver recouped some of their declines as traders assessed the sudden reversal of the record-breaking rally.
Oil prices plummeted on Monday as geopolitical risk premiums faded following U.S. President Trump's statement that Washington is in talks with Iran, with a broader commodity sell-off exacerbating the decline.
WTI crude plunged 4.7%, settling near $62 per barrel, marking its largest single-day drop since June. Brent crude futures also fell sharply. President Trump reacted calmly to threats of regional war issued by Iran's Supreme Leader Khamenei over the weekend, reiterating his hope for a potential agreement between the two nations.
Iran's foreign ministry expressed a desire to avoid war through diplomatic efforts. Axios, citing two informed sources, reported that White House envoy Brian Wittkopf and Iranian Foreign Minister Araghchi were scheduled to meet in Istanbul on Friday.
"This decline appears more like a position adjustment rather than a shift in fundamentals," said Haris Khurshid, Chief Investment Officer at Karobaar Capital LP. "There hasn't been a new supply shock; the market is recalibrating as the short-term supply disruptions it previously feared have not materialized, causing oil to shed some of its risk premium."
Crude oil was also impacted by intense selling pressure across the commodity complex, particularly in metals. Gold fell by as much as 10% at one point, while copper dropped over 5%, extending the retreat that began last Friday.
At the close, March WTI crude fell 4.7% on the New York market, settling at $62.14 per barrel.
April Brent crude declined 4.4%, closing at $66.30 per barrel.
After a wave of heavy selling during the Asian trading session, copper prices recovered some ground, with indications that buyers who had been sidelined by elevated prices were returning to the market.
Other base metals also experienced significant declines, with tin falling up to 11% and nickel dropping 8.1% at one point.
At the close, LME copper fell 2% to $12,891.5 per tonne.
LME aluminum declined 2.8% to $3,056 per tonne.
LME nickel dropped 6.3% to $16,827 per tonne.
LME zinc decreased 2.3% to $3,323.5 per tonne.
LME tin plunged 10.3% to $46,591 per tonne.
LME lead fell 2.3% to $1,963 per tonne.
Following another sharp downturn during Asian trading, precious metals clawed back some losses as traders evaluated the sudden reversal of the historic rally.
Spot gold, after plummeting as much as 10%, narrowed its decline to approximately 5%. Silver, after tumbling 16%, was down about 6%.
Precious metal prices had previously surged to historic highs that surprised even seasoned traders. In January, as geopolitical turmoil, currency devaluation, and renewed concerns about Federal Reserve independence emerged, investors flocked to gold and silver, abruptly accelerating an already red-hot rally. A wave of speculative buying from U.S. investors further fueled the advance.
"Ultimately, the trade became too crowded," said Robert Gottlieb, an independent market commentator and former JPMorgan precious metals trader. He added that investors' reluctance to take on more risk would limit market liquidity.
As of 4:22 PM Eastern Time, spot gold was down 4.7% at $4,664.11 per ounce.
Spot silver fell 6.3% to $79.87 per ounce.
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